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THE MARITAL SETTLEMENT AGREEMENT (MSA)

A marital settlement agreement (MSA) goes by many names, depending upon the jurisdiction. It can be called a divorce settlement agreement; separation and property settlement agreement; custody, support, and property agreement; mediated separation agreement; collaborative settlement agreement; or property settlement agreement (PSA). The Marital Settlement Agreement should not be confused with the Marital Separation Agreement (only used for spouses who are separating but not yet divorcing).

The purpose of a marital settlement agreement is to set out any and all agreements reached between divorcing spouses.

A marital settlement agreement spells out the terms and conditions of the divorce and the relationship between the two spouses after the divorce. This agreement should cover property division, debt division, child custody, child plans, spousal support and any other relevant issues related to the divorce.

The MSA sets out all of the agreements in writing, limiting uncertainty, and proves to the court that major issues were thought out and resolved.

The MSA must be intelligible to a person who does not know the parties in the case.

The marital settlement agreement can be entered into at any time before the Final Judgment or Decree of Divorce. The Agreement is typically filed with the divorce paperwork and incorporated into the Final Judgment or Decree.

While the format and layout of the MSA may vary, a number of elements should be included. Not all the sections are always necessary in a marital settlement agreement; depending upon the spouse's situation.

Below you will find a description of the marital settlement agreement and its various required forms for filing for divorce. Some sections of an MSA are written in stock language that is paraphrased and abbreviated here.

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Introduction:

The purpose of the introduction is the identification of the parties.

The agreement begins with an introduction identifying the spouses, and basic information -- Social Security numbers, place of residence, telephone numbers, and place of employment. This section identifies the date the spouses made the agreement and it establishes the antecedent for the spouses, individually and collectively, as "party" or "parties" and "parent or parents."

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Recitals:

The Recital sets out some of the facts of the case and establishes the terms and conditions by which the settlement operates.

This section sets out the established facts of the divorce action, including:

a. The date of marriage and separation.

b. Grounds for divorce. For example this one sentence statement may be: the parties believe that the marriage is irrevocably broken and there is no chance for reconciliation.

c. A statement concerning what the parties are settling: to include the settlement of all marital affairs, fully, including all property, debt, any retirement or pension accounts, if there is alimony or spousal maintenance, all issues with the child or children, including custody, visitation, child support, childcare, secondary school expenses for the child or children, all medical and health insurance, and all tax issues (child exemptions as well as how you are filing your taxes).

d. The name, age, date of birth and Social Security number of the child(ren).

e. A statement of the couples' intention to settle their issues.

f. A statement letting the court know there are no other actions pending with a court.

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Property and Debt Distribution:

This section sets out which spouse will be responsible for the assets and liabilities of the marriage. If there are no assets or debts, the MSA will also state this. There are further statements in this section protecting each spouse from any future issues regarding any debt or liability the other spouse may incur.

a. Here the parties identify marital (or community) property that is going to be the sole property of one another. This section will also make a statement that each spouse will agree to quit claim his or her share in any marital property.

b. There will also be a statement that both spouses agree to divide the marital or community debts and indemnify the other spouse.

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Marital Home:

The Marital Home deals with one of the largest assets a divorcing couple must divide. The summary is rather incomplete as there are several other issues that must be addressed regarding the Marital home, such as settlement dates, expectations, and ongoing financial responsibilities, etc.

a. Spouses normally sell the home and divide the profit (or the loss) after paying the outstanding mortgage, or jointly own the home so that children remain undisturbed, or one spouse buys out the other's interest.

b. When the parties do not own a home, there is typically a statement to that effect.

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Retirement Accounts/Pensions/401(k)s/Profit Sharing Plans:

Retirement Accounts/Pensions/401(k)s/Profit Sharing Plan are among the most complicated and difficult facets of a divorce. The preparation of a QDRO is a legal specialty and is often done in conjunction with the Divorce Decree or Judgment or right after the divorce is finalized. Also, if a present value of the marital portion of the retirement account is established, often it is easier to offset this asset with another asset in the property distribution negotiation.

a. Retirement accounts, pensions, 401(k)'s, and profit sharing plans are all martial property when the benefits are earned during the marriage.

b. As such, benefits are subject to division and distribution via a Qualified Domestic Relations Order (QDRO), which is prepared separately from the MSA.

c. Couples can agree to each waive all claims, now and in the future to the other's retirement accounts, pensions, 401(k)'s, or profit sharing plans.

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Spousal Maintenance:

Spousal Maintenance can become contentious and explosive. Judges and courts have considerable latitude in terms and conditions of alimony awards. In addition to reimbursement alimony, courts grant temporary alimony (alimony pendente lite), an ongoing payment during divorce proceedings; permanent alimony, the amount awarded after the conclusion of divorce proceedings, paid on a regular, recurring basis; rehabilitative alimony, financial support while job-searching or receiving instruction to expanding employment, and lump-sum alimony (alimony in gross), a one-time lump-sum payment in lieu of the property.

a. Very often one spouse will pay the other spouse rehabilitative spousal maintenance when he or she has helped him or her through school with the expectation that his or her higher education later will result in a higher standard of living for them both. There is also a more traditional type of spousal support, which is paid to a spouse that was the homemaker for multiple years.

b. This section spells out the amount of spousal support, the payment date and terms of termination, which usually occurs with the death of either party, remarrying, cohabitation with another partner, or a set amount of time after the first payment was made.

c. An alimony or spousal support award can be made nonmodifiable.

d. The payor may deduct the payment from his or her income tax, and recipient must include alimony in his or her income tax.

e. This section will also include a statement that the parties are responsible for his and her own health and medical insurance coverage.

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Custody/Physical Placement and Parenting Time:

The Custody/Physical Placement and Parenting Time section establishes how the parents will co-parent their children. This section is included because parenting after a divorce makes great demands on the divorced parent, so establishing the terms of custody - in this case, joint legal and physical custody - makes it clear and becomes a court order.

a. The type of custody is specified and which parent is awarded custody of the child(ren). It is very common for both parents to agree that it is in the best interest of the child that they both have joint/shared legal custody of the child(ren).

c. The parents agree to an attached schedule for possession/parenting time, which is attached and incorporated by reference. This can be a detailed schedule of holidays and overnights the child(ren) spend with the non-custodial parent.

d. The parties pledge good will and agree to use their very best efforts to insure the child receive the most care, love and affection possible.

e. The parties pledge good will and to share information about the child openly and freely with one another and agree not to hamper or interfere with the natural and continuing relationship between the child and the other parent.

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Parenting Plan/Agreement:

The Parenting Plan/Agreement is an attachment to the agreement that spells out the dates and times of child visitation (also known as parenting time) by the noncustodial parent. It is very explicit, so there are no doubts about when and where the parent may visit with his or her child. It may also address how certain decision will be handled regarding religion, education and other activities. Often this information is addressed within the marital settlement agreement, in which case a parenting plan/agreement would not be necessary. A parenting plan/agreement would also only be pertinent if the parent share joint legal custody of the child(ren).

a. Both parties state there is a parenting agreement and plan in effect as of the date of the agreement, and attach it to the MSA to become part of the agreement and any subsequent court order.

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Child Support:

The Child Support section spells out the terms and conditions the noncustodial parent supports his or her children.

a. The parties agree on the amount of support paid from one parent to the other for child support and the payment date. There are also stipulations, often according to state laws, as to how the long the support payments will last (typically the age of emancipation).

b. A statement regarding proper notification of address changes and income changes is included in this section.

c. Income withholding is addressed as to whether or not it will be implemented and the course of action if support payments are delinquent.

d. Declare life insurance on the paying parent (obligor) and the amount, with the child or children as sole irrevocable beneficiary in case the obligor dies prior to emancipation.

e. A completed child support calculation worksheet is often referenced as an exhibit.

f. There is a statement that the support may be different than what may be on the child support calculation worksheet because both parties agree to deviate from the guidelines.

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Medical/Health Insurance:

In this Medical/Health Insurance section the parents typically agree that the one parent pays for the medical, dental and hospitalization of the child or children and the parents proportionately split the cost of any deductible expense. Of course other arrangements can be agreed on as long as the court sees it as in the best interests of the child(ren).

a. One spouse is typically responsible for maintaining medical, dental and hospitalization insurance for the child(ren), and he or she agrees to pay a portion of his or her share including any required deductible, as well as necessary medical and dental expenses of the child or children that would not covered by insurance.

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Secondary School Expenses:

a. The parties agree how secondary school expenses are going to be handled.

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Child Care:

Proper Childcare language addresses the place and protects the obligor parent from paying anything more than the support he or she agreed to pay as part of the monthly child support award. If childcare is to be treated above and beyond the monthly child support award then it would clearly state in this section.

a. The parties agree whether or not either parent will be responsible for any childcare expenses beyond monthly support and how much.

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Tax Exemptions:

Tax Exemptions are an important issue and may be settled based on the agreement of the parents as long as they conform to IRS regulations.

a. The parties set out who will be entitled to claim the child(ren) as a dependent on his or her federal, state and local income tax. This can be done on an alternating year basis if desired.

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Income Tax Returns:

Income Tax Returns are very important because the IRS may audit divorced spouses and it may make claims if taxes are due.

a. Divorcing spouses who are married on the last day of the calendar year my file a joint return if they wish.

b. They should agree and cooperate in filing any necessary returns.

c. The parties agree to promptly notify each other in the even of an IRS audit regarding tax returns they jointly filed or that should have been jointly filed.

d. The parties agree to cooperate with each other in any claims for refunds or in defending against deficiencies.

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Profession Fees and Costs:

a. The parties list professional service fees they want to be recognized, mentioned or distributed by this agreement. This may include, but not be limited to, any legal fees, mediation fees, or court fees.

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Advice or Counsel:

Advice or Counsel is a standard statement included in agreements.

a. The parties each acknowledge their right to representation by an attorney.

b. The parties state that both agree the terms in the agreement are impartial and reasonable.

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Mutual Releases:

Mutual Release is a standard statement included in agreements.

a. The parties agree to release each other from any claim of action they may have against each other for any reason occurring prior to this agreement.

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Governing Law:

Governing Law is a standard statement included in agreements.

a. The parties agree that the laws of the jurisdiction in which the action is filed govern the MSA.

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Entire Agreement:

Entire Agreement statement protects the whole of the agreement against any defect in a part. The clause is standard in agreements.

a. This states that if any part of this agreement is found unenforceable, the rest of the agreement is still valid and one section will not affect any other section in the agreement.

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Further Assurance:

Further Assurance is a pledge of good faith, and is standard clause in the MSA.

a. The parties are agreeing to delivery of any papers or documents necessary for the performance of any obligations set forth in the agreement promptly to each other.

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Captions and Interpretation:

Captions and Interpretations assure that the MSA is interpreted fairly and without bias in favor of one party over the other.

a. No provision of this agreement is to favor one party over the other whether the agreement is drafted by the parties or by an attorney.

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Submission to Court:

a. This section states the MSA has been written with the intention that it is to be submitted to any court in the jurisdiction where a Petition or Complaint for Divorce may be filed as part of a divorce action.

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Verification/Disclosure:

Verification/Disclosure assures the parties of mutual honesty.

a. This states that each party has been honest and fully disclosed his or her financial information, including all assets and liabilities. Often a financial disclosure statement is attached.

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Successions:

The Successions clause is a standard binding of the identified parties to the terms of the agreement.

a. Successions oblige the parties' any heirs, as well as others, to the statements set out in the Agreement.

As seen on Forbes, USA Today, CNN and NPR
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