What Should a California Marital Settlement Agreement Include?
A marital settlement agreement, sometimes referred to as a “divorce agreement,” should include all terms related to property division, debt allocation, child custody, child support, and spousal support. A well-drafted marital settlement agreement helps ensure a smooth transition by comprehensively outlining how both spouses will move forward legally and financially after divorce. It should also address matters such as retirement asset division, taxes, and future conflict resolution.
The Power of Co-Creating Your Own Marital Settlement Agreement
In a typical litigated divorce, each spouse hires their own lawyer to negotiate on their behalf. A lawyer’s job, however, is not necessarily to bridge the gap between two parties and help you and your spouse resolve disputes amicably. If you and your spouse cannot settle on an agreement, your case proceeds to court. This is where details of your case are entered into public record and important life decisions are left in the hands of a judge.
Many Californians, however, are taking divorce into their own hands and creating their own marital settlement agreement through divorce mediation.
Divorce mediation is simple, streamlined, and far less stressful than litigation. You and your spouse meet face-to-face in complete privacy—no lawyers, no judges, no court dates, and no public audience. Your mediator will facilitate structured discussions and negotiations.
Under the guidance of Colleen McNamee, Orange County’s Master Mediator and only Certified Family Law Mediation Specialist, you and your spouse define the terms of your own marital settlement agreement and can begin the next chapter of your individual lives with more confidence and ease.
Property Division
Community property generally includes all the assets acquired over the course of the marriage, which can include real estate, bank accounts, investments, business interests, and personal belongings. California law generally requires community property to be divided equally. In mediation, however, spouses can mutually agree to tailor the division of their community property in a way that both find fair, equitable, and suitable to their individual circumstances.
Debt Allocation
California courts consider the debts accumulated during the marriage to be shared debt. Courts often default to a 50/50 split, regardless of who incurred the debt, who benefited from the spending, or whose name is on the mortgage, loan, or credit card.
How Divorce Courts Divide Debt Isn’t the Same as Who Is Legally Responsible for It
When divorcing with debt, it is crucial to understand that creditors will pursue the sole account holder on an individual credit card or loan, or both account holders on a joint account, regardless of how divorce courts assign or divide the responsibility for debt repayment.
For instance, you may be the sole account holder of a credit card or loan that was opened during your marriage. If you choose to litigate your divorce and your case goes to court, the judge may assign the debt obligation to you and your spouse equally. This is often not the most practical or equitable division, especially for long-term marriages with significant shared expenses, mismatched spending habits, or high child-related costs. Missed payments may ultimately lead to collection calls and long-term credit damage for the sole account holder.
Protect Your Credit When Dividing Debt in a California Divorce
Mediation has no impact on your credit score, even when the settlement involves making payments to the other party. In fact, the California Courts recommend financial mediation for divorce for this reason. Mediation helps spouses formulate a practical plan for how mortgages, credit cards, loans, and other liabilities will be managed to prevent confusion and avoid future financial disputes.
Spousal Support
A marital settlement agreement should clearly define the amount, duration, payment schedule, and conditions for modification or termination of spousal support.
How Is Spousal Support Determined?
Spousal support is a financial agreement in which the lower-earning spouse receives payment from the other spouse. It is designed to help the supported spouse maintain the standard of living established during marriage and “get back on their feet.” The amount and duration of spousal support can depend on factors such as the length of the marriage, each spouse’s income and earning capacity, age, health, financial circumstances, and the standard of living established during the marriage.
Monthly Installments vs. Lump-Sum Spousal Support Payments
Spouses should also decide whether support will be paid through ongoing monthly payments or another agreed-upon structure. Monthly payments can provide greater flexibility if financial circumstances change, while a negotiated lump-sum arrangement may provide a cleaner financial break and reduce the need for future interactions between former spouses.
A Spousal Support Plan That Reflects Real-Life Financial Needs
Rather than leaving it up to the court to decide support based on standard formulas, mediation helps spouses discuss their actual financial needs, realistic earning potential, career sacrifices, and long-term goals and create an arrangement that works for both parties. You and your spouse may negotiate spousal support while considering the whole picture of the marital finances, including property, investments, and debt allocation. Contributions made during the marriage, such as supporting a spouse’s education or career or stepping away from work to raise children, may also be relevant.
Child Custody
A marital settlement agreement should establish a clear custody agreement and co-parenting plan that prioritizes the children’s best interests while providing both parents with predictable expectations. It should address:
- Physical custody, which determines where the children will live and how parenting time will be shared.
- Legal custody, which addresses how important decisions about the children will be made. Provisions should clarify how parents will make decisions regarding education, healthcare, childcare, extracurricular activities, and other significant aspects of the children’s welfare.
- The children’s regular schedule, including school, extracurriculars, weekends, social activities, transportation, and exchanges between households.
- Holidays, birthdays, school breaks, vacations, and other special occasions so parents are not left negotiating these arrangements each year.
- Reasonable flexibility for parents to mutually agree to changes as their children’s schedules and needs evolve.
- Specific religious, medical, educational, developmental, or other considerations
Divorce mediation guides parents through designing an arrangement that reflects the children’s ages, each parent’s work and commitments, and the practical realities of their family. Mediation can reduce the emotional toll of change, helping parents provide greater consistency for their children as they adjust to life after divorce.
Child Support
California child support in California is generally calculated using statewide guidelines that consider factors such as each parent’s income and the amount of parenting time exercised by each parent. The marital settlement agreement should clearly document the child support amount, payment schedule, and responsibility for additional child-related expenses.
Expenses That May Not Be Covered by Child Support
Parents should also establish how they will divide costs that may fall outside ordinary support payments, such as health insurance, uninsured medical, vision and dental expenses, childcare, education, extracurricular activities, schooling, and other significant expenses. Clearly identifying these responsibilities can reduce disagreements over who pays for unexpected costs and how reimbursement will be handled.
Child-Centered Divorce Mediation
Mediation allows parents to discuss child support alongside the broader financial realities of raising their children. Parents can consider their respective incomes, expenses, and anticipated child-related costs when developing a practical agreement. This collaborative approach helps give both parents a clearer understanding of their parenting and financial responsibilities after divorce.
Retirement Accounts & Investments
Retirement assets such as 401(k)s, pensions, and IRAs can be among the most significant assets a person owns. In California, retirement benefits earned during the marriage are generally treated as community property.
A marital settlement agreement should clearly identify how each retirement asset will be divided and whether one spouse will retain a particular account in exchange for other marital assets.
Strategic Retirement Asset Division in Divorce Mediation
Mediation can be particularly valuable in a gray divorce or when spouses have different retirement timelines, financial needs, and priorities. Spouses can work together to develop a more strategic overall division that accounts for each spouse’s long-term financial security. A strict 50/50 division of each individual account is not always necessary if you and your spouse agree to an overall division of property that you mutually find fair and acceptable.
This flexibility allows one spouse to retain more retirement assets while the other receives assets that better meet their immediate or future financial needs. For example, one spouse may retain a greater share of retirement assets while the other receives the marital home or other property.
Tax Considerations
A marital settlement agreement should account for the potential tax consequences. For example, one spouse may receive the marital home while the other receives investment accounts or assets of a similar present-day value. However, these assets may be treated very differently for tax purposes. If the spouse who retains the home later sells it, capital gains tax may apply. The investment accounts retained by the other spouse may carry gains that result in taxes when the assets are eventually sold.
Taxes can also affect decisions about when and how assets are used or liquidated. Cash, real estate, and investment accounts each carry different levels of liquidity and tax exposure, which can significantly influence each spouse’s financial position after divorce.
Mediation can help spouses look beyond current valuations and consider the long-term, after-tax value of their overall settlement. You and your spouse can create a more balanced and practical agreement that aligns with each of your individual financial goals and reduces the likelihood of unintended financial consequences in the future.
Future Dispute Resolution
Hailed as the “Divorce Whisperer,” Colleen McNamee has mediated more than 10,000 cases. In almost every instance, the couple has walked away on friendlier terms—some have even rekindled their love and reunited.
Even when a marriage ends on the best of terms, however, disagreements can arise. It is a good idea to detail how future disputes will be resolved in your marital settlement agreement. For instance, including a clause for mediation ensures that future conflicts can be handled efficiently without returning to court.
McNamee Mediations helps couples create clear, comprehensive marital settlement agreements through private mediation. Take control of your divorce and move forward with confidence.
Call Us Today: (949) 223-3836
Email: mmediations@msn.com
Frequently Asked Questions: California Marital Settlement Agreement
Is a Marital Settlement Agreement Legally Binding in California?
Yes, a marital settlement agreement becomes legally binding once it is signed by both parties and approved by the court. It is typically incorporated into the final judgment of dissolution. Both spouses are legally required to follow its terms.
Do I Need a Lawyer to Create a Divorce Agreement?
No, you are not required to have a lawyer to create a divorce agreement, especially in mediation. A mediator serves as a neutral third party, guiding you and your spouse as you collaboratively draft your marital settlement agreement. You or your spouse may consult with an attorney at any time if you wish.
