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Drafting Property Settlement Agreements

If parties to a divorce are able to agree on how to divide their assets, a formal property settlement agreement or separation agreement should be prepared. Detailed lists of who gets what should be included in this agreement. Usually, attorneys use form agreements, such as those found in Lindey on Separation Agreements and Antenuptial Contracts (Matthew Bender & Co., Inc.) to assist in the preparation of the specific property settlement agreement, but such forms should not be slavishly followed. An attorney should be fully aware of all of the provisions in any agreement that he or she prepares and use the form as a starting point for drafting.
 
Over time, family law attorneys develop their own sets of forms that are applicable in different circumstances. For example, a property settlement agreement for a wealthy client will likely be much more complex than one for a client with relatively few assets. In the “practice makes perfect” vein, family law attorneys discover over time what clauses are absolutely essential in any property settlement agreement and make sure to include those in every agreement.
 
Some provisions commonly included in property settlement agreements include the following:
 
  • Acknowledgement of receiving advice of counsel
  • Representation of full disclosure of assets and debts
  • Agreement as to tax ramifications
  • Division of assets, including realty, vehicles, bank accounts, good will in businesses,
  • Division of debts
  • Acknowledgement of equitable division of property
  • Indemnification provisions
  • Release of intestate or other inheritance rights
  • Merger and separability clauses
  • Requirement of writing for modifications
  • Choice of law
  • Penalties for noncompliance, including recovery of attorney fees for the prevailing party 
PSAs often also include provisions relating to spousal support, alimony, alimony pendente lite and attorneys fees. Some states also allow Marriage Settlement Agreements to include provisions governing custody and support of children.
 
A family law attorney should always ensure that his or her client reads the property settlement agreement carefully and is afforded the opportunity to ask questions about anything the client does not understand to avoid misunderstandings (i.e., malpractice suits) later. Once the parties have signed the agreement, it should be submitted to and approved by the court.
 
Following through after the Divorce
 
As soon as the property settlement is approved or the court finalizes the divorce, the parties will be required to act as required by the agreement, which entails
 
  • Transferring property by obtaining signatures on any deeds, stock transfers or bank account forms
  • Making any payments necessary to fulfill the property division arrangement
  • Starting the process of refinancing property if that is a part of the agreement
  • Executing necessary releases on the titles being transferred
Your client should be impressed with the importance of following through with these actions to avoid further court action, which may include proceedings for civil contempt of court.