What Not to Forget in a Divorce Settlement

When negotiating a divorce settlement, it is important not to forget key issues such as property division, retirement accounts, debts, child custody, child support, spousal support, tax implications, and any future financial obligations that could affect your long-term interests. 

Even seemingly minor details can have significant legal and financial consequences if they are not addressed before the agreement is finalized. An experienced divorce lawyer can help ensure your settlement is thorough, protects your rights, and reflects your best interests both now and in the future. 

Contact a Salt Lake City divorce lawyer from Brown Family Law today to discuss your case and learn how skilled legal guidance can help you pursue a fair and comprehensive divorce settlement. 

What Should You Not Forget in a Divorce Settlement?

A complete divorce settlement should clearly address:

• Division of real estate
• Personal property
• Bank and investment accounts
• Retirement benefits
• Business interests
• Marital debts
• Child custody and parent-time
• Child support and children’s expenses
• Alimony
• Health and life insurance
• Taxes
• Deadlines for transferring property or refinancing debt
• Procedures for handling future disagreements
• Enforcement if one person fails to comply

Under Utah law, a divorce decree may include equitable orders concerning the parties, their children, property, debts, and other obligations. Utah courts generally divide marital property equitably. This does not mean that every asset will be divided evenly in half.

The agreement should explain who receives each asset, who is responsible for each debt, when required actions must happen, and what happens if someone does not follow through. A divorce attorney at Brown Family Law can help you see what an equitable division looks like.

What Happens to the Marital Home?

The settlement should say more than which spouse “gets the house.”

If one spouse will keep the home, the agreement should address:

• The property’s agreed value
• The mortgage balance
• Any home equity line or secondary lien
• How the other spouse’s equity will be calculated
• The amount and deadline for any equity payment
• Whether refinancing is required
• The deadline for refinancing
• Who pays the mortgage, taxes, insurance, utilities, and repairs until refinancing is complete
• What happens if refinancing is denied
• Whether the home must be sold if refinancing does not occur
• Who selects the real estate agent if the home is sold
• How the listing price will be established
• How offers and price reductions will be handled
• How sale proceeds and closing costs will be divided

Keep in mind: a divorce decree can assign responsibility for a mortgage between former spouses, but it does not automatically remove a borrower’s name from the loan. The lender is not bound by the spouses’ private allocation of the debt. 

Please keep this detail in mind because it means a person may remain financially responsible to the lender even if the divorce settlement says the other spouse must make the payments. A refinance or sale may be necessary to remove that risk.

Is a Quitclaim Deed Enough to Remove Someone From the Mortgage?

No. A quitclaim deed may transfer an ownership interest in real property, but it does not remove a person from the mortgage loan.

Ownership and mortgage responsibility are separate issues. If one spouse signs a deed transferring the house but remains on the mortgage, that person may no longer own the property yet remain legally responsible for the debt. 

The settlement should coordinate the deed transfer with refinancing, sale, or another reliable method of addressing the mortgage.

What Should the Settlement Say About Debts?

Each known marital debt should be identified and assigned. The agreement should address:

• Mortgages
• Vehicle loans
• Credit cards
• Personal loans
• Medical bills
• Tax liabilities
• Business debts
• Student loans
• Home equity lines
• Buy-now-pay-later accounts
• Loans from relatives
• Debts secured by marital property

It is also important to establish a cutoff date for new charges. The agreement can state that each party will be responsible for debts incurred individually after separation or after a specified date.

Remember that assigning a debt in a divorce does not rewrite the original contract with the creditor. If both spouses signed for a joint credit card, auto loan, or mortgage, the creditor may still pursue either borrower if payments are missed.

The settlement should therefore include deadlines for closing, refinancing, paying off, or otherwise separating joint accounts whenever possible. Brown Family Law can help with this.

Can the Settlement Protect Me if My Former Spouse Does Not Pay a Joint Debt?

The agreement can require your former spouse to pay the debt and reimburse or protect you from losses caused by nonpayment. This type of provision is often called an indemnification or hold-harmless provision.

However, that language does not prevent the creditor from seeking payment from a person whose name remains on the account.

If your former spouse violates the decree, you may need to seek enforcement through the court. Utah courts provide a Motion to Enforce Order procedure when a party fails to comply with an existing domestic order or divorce decree.

What Should We Include About Retirement Accounts?

Retirement accounts are among the most valuable and frequently mishandled assets in divorce.

The settlement should identify:

• Each retirement plan
• The owner of the account
• The amount or percentage awarded to the other spouse
• The date used to calculate the marital portion
• How market gains or losses will be handled
• Whether outstanding plan loans affect the division
• Who will prepare any required transfer order
• Who will pay the preparation fees
• The deadline for submitting the order
• What happens if a plan will not accept the proposed order

Utah courts recognize retirement funds as property that may need to be divided in a divorce.

Many employer-sponsored retirement plans require a Qualified Domestic Relations Order (QDRO) before the plan administrator can transfer benefits to a former spouse. Other plans, including certain government, military, or public retirement systems, may use a different type of order. The divorce decree alone may not complete the transfer.

When Should a QDRO Be Prepared?

Ideally, the retirement division process should begin before the divorce is finalized or immediately afterward.

Waiting can create serious problems. The account owner may retire, die, withdraw funds, take a loan, change beneficiaries, or otherwise affect the account before the necessary order is approved.

The settlement should specify who is responsible for preparing and submitting the order. It should also require both parties to cooperate, sign required documents, and provide information requested by the plan administrator.

Should the Settlement Address Taxes?

Yes. Tax consequences can significantly change the real value of a settlement. Issues to consider include:

• Who may claim a child as a dependent
• Whether the parents will alternate the child-related tax benefits
• Who receives any pending tax refund
• Who is responsible for unpaid taxes
• How the parties will respond to an audit of a joint return
• Whether estimated taxes have been paid
• Capital gains consequences from selling property
• Tax treatment of retirement transfers
• Filing status for the year of divorce
• Responsibility for penalties and interest
• Whether one spouse must sign an IRS form releasing a child-related claim

Tax laws and individual circumstances can change. A family law attorney from Brown Family Law can address the settlement language, but a certified public accountant or tax attorney may also need to review the financial consequences before the agreement is signed.

What Should Be Included in a Parenting Plan?

A parenting plan should provide enough detail to reduce predictable conflict. It should address:

• Legal custody
• Physical custody
• The regular weekly schedule
• Holiday schedules
• School breaks
• Summer parent-time
• Transportation and exchange locations
• Pickup and drop-off responsibilities
• Travel with the children
• Passports
• Communication between parents
• Communication between each parent and the children
• School and extracurricular decisions
• Medical and mental health decisions
• Religious upbringing, when relevant
• Access to school and medical records
• Notice of emergencies
• Procedures for schedule changes
• Relocation
• Methods for resolving disagreements

Vague language such as “reasonable parent-time” may work when parents communicate well, but it may become difficult to enforce when the relationship deteriorates.

Utah divorce cases involving children may require orders covering legal custody, physical custody, parent-time, child support, and other issues affecting the children.

Should We Include a Right of First Refusal?

A right of first refusal will generally dictate that one parent offer the other parent the first opportunity to care for children when they are technically on the scheduled time with the opposite parent, before using an alternative resource such as a babysitter, nanny, grandparent or other relative, or caregiver of another kind, for a specified period of time. 

If the settlement includes this provision, it should be precise. It should explain:

• How long a parent must be unavailable before the provision applies
• Whether it applies during work hours
• Whether it applies to relatives or stepparents
• How much notice is required
• How the offer must be communicated
• How quickly the other parent must respond
• Who provides transportation

Without those details, a right of first refusal can cause more arguments than it prevents.

What Children’s Expenses Should Be Addressed Beyond Child Support?

Base child support may not cover all child-related expenses. The settlement may also need to address:

• Health insurance premiums
• Uninsured medical expenses
• Dental and orthodontic care
• Therapy and counseling
• Childcare
• School fees
• School supplies
• Extracurricular activities
• Sports equipment
• Camps
• Tutoring
• College preparation expenses
• Cellphones
• Vehicles and automobile insurance
• Travel costs
• Special-needs expenses

Utah calculates base child support using statutory guidelines that consider the parents’ incomes and the applicable custody arrangement.

For additional expenses, the agreement should state whether prior approval is required, how costs will be divided, when reimbursement must occur, and what documentation must be provided.

What Should the Settlement Say About Alimony?

An alimony provision should clearly state:

• The amount
• The payment date
• The payment method
• The duration
• The start date
• Events that terminate the obligation
• Whether the amount may be modified
• Whether the duration may be modified
• How missed payments will be handled
• Whether life insurance is required to secure the obligation

Utah courts consider multiple statutory factors when determining alimony, including the marital standard of living, the recipient’s financial condition and needs, earning capacity, the paying spouse’s ability to provide support, and the length of the marriage. Utah law also allows alimony modification in some circumstances when there has been a substantial material change not already contemplated by the decree.

Because modification rights can have significant long-term consequences, the settlement should not use unclear language about whether alimony is final, reviewable, or subject to future changes.

Should Life Insurance Be Included?

Life insurance may be appropriate when one person will have a continuing financial obligation, such as alimony, child support, or an unpaid property settlement.

The agreement should specify:

• The required coverage amount
• The policy owner
• The insured person
• The beneficiary
• How long coverage must remain in place
• Whether coverage may decrease as the obligation decreases
• How proof of coverage will be provided
• What happens if the policy lapses
• Whether an existing policy or a new policy will be used

Simply requiring “life insurance” without these details may leave the provision difficult to enforce.

What Happens to Health Insurance After Divorce?

The settlement should identify how each spouse and the children will obtain health insurance after the divorce.

One former spouse generally cannot remain covered as a spouse under the other person’s employer-sponsored plan after the divorce becomes final. Depending on the plan and applicable law, continuation coverage may be available, but it may be expensive and time-sensitive.

The agreement should address:

• When current coverage ends
• Who will insure the children
• How premiums will be allocated
• Whether continuation coverage is expected
• Responsibility for deductibles, copays, and uninsured expenses
• What happens if coverage changes or is lost

Should We Change Beneficiaries After Divorce?

Beneficiary designations should be reviewed as part of the divorce process. Accounts and documents to review may include:

• Life insurance
• Retirement plans
• Transfer-on-death accounts
• Payable-on-death accounts
• Annuities
• Employment benefits
• Wills
• Trusts
• Powers of attorney
• Advance health care directives

A divorce decree may require a former spouse to remain a beneficiary for a particular purpose. 

Do not change a beneficiary designation in violation of a court order or contractual obligation. After the divorce is final, an estate-planning attorney can help make sure your documents reflect the settlement and your current intentions.

What Deadlines Should Be Included?

Every action required by the settlement should have a clear deadline. Examples include deadlines to:

• Refinance a mortgage
• List a home for sale
• Sign a deed
• Transfer a vehicle title
• Pay an equalization payment
• Close a joint account
• Transfer retirement benefits
• Remove personal property
• Provide proof of insurance
• Exchange tax documents
• Reimburse a child-related expense

“Within a reasonable time” may sound flexible, but it can create disputes. A specific number of days or a specific date is usually easier to understand and enforce.

Can We Change the Settlement After the Divorce Is Final?

Some parts of a Utah divorce decree may be modified under the right circumstances. Child support, custody, parent-time, and alimony may be subject to modification depending on the law, the terms of the decree, and whether the required legal standard is met. Brown Family Law can help with these modifications.

Property division is generally much harder to revisit after the decree is entered. That is one reason it is important to identify and properly divide all assets before signing the final settlement. You should not assume that a missing property term can easily be corrected later.

What If My Former Spouse Refuses to Follow the Settlement?

When a divorce settlement is approved by the courts and incorporated into the divorce decree, it becomes a court order.

If one party does not comply, the other party may file a motion seeking enforcement of the order. Depending on the circumstances, the court may order compliance and may consider other appropriate relief. Utah law also allows a court to award costs and attorney fees in certain domestic-order enforcement actions when a party substantially prevails.

Good settlement drafting can make enforcement easier. Specific obligations, deadlines, dollar amounts, account descriptions, and procedures leave less room for disagreement about what the parties were required to do.

Should an Attorney Review a Divorce Settlement Before I Sign It?

A settlement may affect your finances, children, property rights, and legal obligations for years.

Even when both spouses agree, an attorney from Brown Family Law can look for missing terms, unclear deadlines, tax concerns, enforcement problems, and language that may have consequences you did not anticipate.

The Utah Courts also caution that financial issues in divorce can be difficult and may be hard to change after the decree is signed.

You should understand every provision before signing. Pressure to finish the case is not a good reason to accept an incomplete or unclear agreement.

Speak With a Utah Divorce Attorney About Your Settlement

A well-written divorce settlement should provide more than a general understanding between former spouses. It should clearly explain what each person must do, when it must be done, and what happens if the agreement is not followed.

Brown Family Law helps clients evaluate proposed settlements, identify overlooked issues, and negotiate terms designed to protect their families and financial futures.

To speak with a Utah divorce attorney, contact Brown Family Law.