Spell Out Terms of Settlement

Pay off and close all joint accounts before the divorce settlement. Creditors don’t care how a settlement agreement divides responsibility for the debt; they just want the payment. And in a joint debt, (credit cards, auto loans, etc.), each party is liable for the full amount of debt until the balance is paid. If any of the debt is owed to the Internal Revenue Service, you need to clear this up as soon as possible. Even after your divorce is final, you still might be liable for taxes incurred when you filed joint returns.  

DON'T IGNORE INSURANCE

Typically, the party responsible for child or spousal support payments obtains life insurance to guarantee the value of this money in case of death. Make sure that the spouse whose support the policy is designed to protect, or who is the custodial parent of the minor children receiving child support, is the owner or irrevocable beneficiary of the policy.  

If not, the ex-spouse who took out the policy could stop making payments without his or her ex knowing about it until the policy is needed but no longer exists. The owner or irrevocable beneficiary, however, would be notified of any outstanding issues, such as premium non-payment, as soon as the issue arose and therefore could take appropriate action.  

Also keep in mind the need for health insurance coverage for yourself and your children. If one parent has access to medical insurance for family members, examine how such coverage can be maintained.  

BE READY TO NEGOTIATE

Both parties want to ensure that any settlement is fair and properly provides for their children. That means that both sides should be willing to negotiate. The key is to do so in good faith, with adequate representations (both legal and financial) and with all the relevant facts on hand.  

Never feel pressured to accept or make a payment out of guilt or some other emotion. Discuss all the possible pros and cons of each offer proposed during the settlement process with your legal and financial advisors. And while divorce can be tiring, frustration and tedious, never accept a settlement, in part or whole, just to get the process over with sooner.