As you go through the divorce process, one of the most important things that you can do that's easy to overlook is really understanding all of your legal documentation and reading it. Even though most of you going through divorce aren't lawyers, you should be able to read and understand the legal documents that are getting passed back and forth and that ultimately you'll sign as part of a settlement or if you got a temporary order from the court or whatever the case may be needs to, you need to read every word and you need to understand it. One of the things that I want to talk about in this episode is what kind of things you should be looking for as you try and read and understand and go through all of the legal elements of this divorce process.
Just one important note to remind you or as a reminder is on the divorceandyourmoney.com/coaching page, we have a call that you can schedule that is a document review call. It starts with, you send the documents in advance by email after you book the call, or we can arrange a method to transfer them, and then I will go through and read all of the key documentation, be it a settlement agreement or financial affidavits or whatever else, and then we discuss points of change and other things to highlight as part of that call.
In this episode, though, I want to go through three things that you should be doing as you go through the legal paperwork and the documentation in your divorce. The three things are, first, is to understand every word and sentence. Second is think about the what-ifs. Third is do what I call a sanity check, which is what does this mean to someone 10 years in the future?
I'm going to go through each one of these points and talk about them just a little bit for you. The first step in the process is to understand every word and sentence in your legal paperwork. I'm going to use the example of a settlement agreement because that's the one that also usually has the most text to it. It also has a lot of moving parts and the most subtleties when it comes to understanding the words that are in your documentation. I want to use that just for the sake of example throughout this episode is a potential settlement agreement that you're about to sign or you're thinking about signing, or you're in the process of negotiating and you're thinking about.
When I say understand every word and sentence, it means you need to go through literally every word and sentence and make sure that you understand exactly what it is saying. What I do with documents is I get my highlighter out, I get some multicolor pens, I go to a quiet place, and I sit and study the documents. I go sentence by sentence to make sure that everything seems alright to me.
Whenever a sentence sticks out, I give it a highlight. If... Sometimes, I'll just summarize each paragraph just in the notes of a page to make sure that not only did the words make sense, but I'm comprehending exactly what is being said in a particular sentence. Sometimes, I'll get to a sentence that, or a paragraph that doesn't totally make sense to me.
Sometimes, it just feels a little fuzzy. Might not be incorrect. I'm just not 100% sure, and I'll highlight and say, "Hey," and then I'll go back to either a lawyer or to you or if I'm talking with you is like, "Hey, what was the intention with this sentence or this paragraph? I don't totally get it," in which case there might be a perfectly reasonable explanation, and other times, they'll say, "Hey, we need to rewrite this paragraph to make it clearer just so everyone understands that we're all on the same page," but you should be doing that as well is you need to go by sentence by sentence to say, really, one of the main questions you should be asking is, is this is what I intended, does this make sense, is this clear, is there any ambiguity because we don't want to have any ambiguity in the documentation.
I had a case just recently where someone was doing a calculation for their retirement account. They put the formula that they were going to use for the retirement account in there, or pension plan, I should say, the formula they were going to use, but they didn't actually put the numbers specific to the formula. They said it was going to be a certain percentage over a certain number of years, and that's the formula we're going to use, to which I said, "Hey, let's go back to the attorneys, and let's actually just write in... you can say, 'Let's include the formula,' but we also need to include the exact numbers that we're using as part of this formula to determine the payout just to add some clarification to the document."
But anything that's unclear to you needs to be fixed, or if it makes you feel fuzzy or just doesn't quite match what you thought you were agreeing to, you should be looking at those with a fine-tooth comb and reviewing those.
The second thing to think about is what I call the what-ifs. You need to be thinking about all of the what-ifs. Divorce settlements are some of the most complicated in the legal world because in a divorce settlement, you have to try and think about all the different possibilities that may happen in the future. That's not an easy thing to do, but you need to think about those particular possibilities.
I'll give you one with the kids. If you have children, well, what if one spouse moves to a different county or is planning on moving to a different county that's an hour away instead of 10 minute away, or that's two hours away instead of 10 minutes away, or what if one child has a disability? How do you plan on handling that and paying for those usually additional expenses, be it tutors or medical things or whatever else.
Should a spouse be allowed to move away, and how would that affect the custody issues? Custody is a complex area, but it's easy to illustrate some of the what-if scenarios. What if a spouse, if we're talking about alimony or thinking about alimony, what if a spouse starts making double the income? What does that mean for the potential alimony or spousal support payments? What if a spouse loses the income? What does that mean to alimony and spouse support payment? Should things be modifiable or non-modifiable?
There are lots of things to think about when it comes to spousal support, or I'm sorry, when it comes to what-if scenarios, including spousal support or child support or just any number of things that life can present when it comes to the divorce process. One of the things you should be thinking about as you go through and craft a settlement agreement is for each particular topic, you should really be thinking about the what-ifs. What if this happens in one's life? It might not be next month, but it might be two years down the life. Is our agreement set up in a way that it's easy to handle and we have a process in place?
Another common thing that pops up is what if someone loses their job or what if a child gets ill? Let's just say there's an emergency, and you have to take a child to a hospital. Who's going to make those decisions real-time when there's an emergency? Those medical decisions that are all important and they're time-sensitive, how is that handled?
Those are examples of what-ifs that you should be thinking about in your divorce process, and in your life, as you read the settlement agreement, well, what if this happens, what if that happens? Look, like if complicated. You're not going to be able to cover every potential what-if scenario; however, anytime I'm looking at a settlement agreement, you gotta make sure the most-likely what-ifs are covered and how that might look. Usually, usually, a good attorney has those what-if scenarios or many of those what-if scenarios already covered in an agreement.
Oh, I'll give you one that is a popular one that I see less often than I should, but it's very important. Let's just say one spouse is paying spousal support, and the other spouse receiving spousal support, of course. Let's just say the spouse receiving spousal support remarries. Well, almost all the time in every state, just about, if someone remarries, then that spousal support is expected to end.
But what if that person doesn't remarry but chooses to live with someone for the next decade? Should that spousal support end? Many times, I would say yes, but the point is, is that needs to be written in the agreement in how you determine what the conditions are for the ending or termination of spousal support. To be fair to both parties is very important in your settlement documentation, and that's a what-if that people should be thinking about.
Now, the third thing to consider is what I call the sanity check. The sanity check is very important because... What is it? The sanity check that I like to call it is also just kind of, let's think about this in the future. Let's just say that five years from now, some random person who has no involvement in the divorce reads your documentation and has to make a ruling on it and say that, "Oh, well, you agreed to this. Does this make sense, or is this the way that you intended things to happen, and does it make sense for what's actually written in the document?"
Now, what did I mean by that? That was a little bit of a convoluted explanation. What I mean is, is oftentimes, and this is one of the most important things I want you to keep in mind, oftentimes, when you have a lot of context, when you have a lot of "your life" involved in the divorce documentation, you intuitively understand supposed to or at least you think you intuitively understand supposed to happen as part of this divorce agreement given that everything's fresh.
But what if a few years down the line, going back to that what-if, what if there's a dispute, and one spouse wants to take the other spouse back to court or back to the lawyer's office and say, "Hey, this issue isn't being upheld correctly," or, "It's not being handled properly," or, "I want to modify this particular clause." Well, 10 years from now, if someone's reading this documentation, or five years from now if someone's reading this documentation, is it very clear as to what exactly you agreed upon, and would it make sense to someone who has no context other than just the legal documentation?
I'll give you a case that happened to one of my clients I've worked with for several years both during and after their divorce is their spouse, or ex-spouse, I should say, did not make any kind of, the ex-spouse had, for several years, not been making a specific payment that he was supposed to be making. This payment was a monthly payment that he just never made. It was... and after several years actually owed my client quite a bit of money.
Now, the good news was we went back to the documentation. We looked at it, and we looked at the exact wording, and it was very clearly spelled out and exactly what was supposed to happen. We went to the bank statements. We gathered up the receipts, and said, "Hey, ex-spouse, you owe us many thousands of dollars because we haven't gotten this payment you had supposed to have been making," excuse me. We were able to get that resolved.
But other times I'll look at documentation where someone calls, and I'll read the documentation, and I'll say, "I'm sorry. I get what you're missing, and I understand what you're saying, but the legal documents that you signed, that you and your spouse signed don't quite say that. It's hard for me to understand what exactly is supposed to happen here in terms of how this all works and what you're expecting to happen. I get that it doesn't match what you agreed upon, but you signed this paperwork that said this, and now you're trying to challenge it." It's going to be hard to prove later down the line.
The point being is for every part of the divorce settlement that you read, make sure it's clear, and make sure to be clear to someone who knows nothing about your case many years in the future so if there's a dispute or if something arises, the solution, so to speak, is already in the divorce paperwork, and it's very clear for everyone who is involved.
Those are the three things when it comes to understanding your documents. The first thing is, one is review and understand every word and sentence in your documentation. The second is think about the what-ifs, all the potential scenarios that could happen, and try to address as many of the most-likely ones as you can in the divorce paperwork that you're trying to figure out. The third is do your sanity check, is think about this agreement you're about to sign from the perspective of someone who knows nothing about you, or let's just say a judge, 10 years into the future. If there's an issue, will this paperwork still make sense to the person who's not involved in the scenario, and how might think they about the issues that are being presented.
Also, just one last thing, as I said, is one of the most popular things I only recently launched in the past year is a document review session where we can get in-depth in the documentation that you're looking at as part of your divorce. One of the most common things people ask, and honestly, I say divorce isn't, clearly, is not a fun process, but one of the most fun parts for me or one of the most enjoyable parts for me is reviewing the settlement agreements and thinking about the different scenarios and trying to figure out ways that we might be able to make one section better or improve a section or alter a section so that everyone is happy and we can get this down the line and make sure that there's no unclear area. You can book a document session review with me as well. I do many of them every week, and they're one of my most famous, or most favorite, I should say, parts of this process to review as well.
I hope you found this episode helpful, and talk to you soon.