Before You Sign . . . Critical Oversights in Florida Divorce Agreements

By: Jarbath Pena Law Group

Going through a divorce can be one of the most emotionally taxing and complex experiences you’ll ever face. Many people successfully create an amicable agreement to save themselves from having to take the case to trial. This is often the least expensive and least stressful way to divorce. But when you make your own agreement, things can be left out.

As you work to finalize your divorce agreement, it’s natural to focus on the big-ticket items—dividing property, setting custody arrangements, and determining alimony or child support. But even the most carefully prepared agreements often overlook key issues that can cause significant problems down the road. If you’re navigating a divorce in Florida, understanding these commonly overlooked issues and addressing them in advance can save you time, money, and heartache later. Whether you are working with your spouse to resolve the terms of your divorce by agreement or going to court to let the judge decide, it’s best to ensure that you cover all of your bases by hiring a family law attorney at Jarbath Peña Law Group. We all know it is harder to fix a problem later than to ensure that you cover as many foreseeable changes that might arise as time goes on within the initial agreement or order.

Here, in the first part of this three-part blog series, we’ll explore six critical areas that are often ignored in divorce agreements, how these oversights can backfire, and what you can do to protect yourself and your family.

Parenting Time Adjustments for Unforeseen Circumstances

Parenting plans are designed to provide a stable and predictable schedule for children and their parents. Under Florida Statutes § 61.13(2)(c), parenting plans must be created with the child’s best interests in mind. But what happens when life throws you a curveball? Many agreements fail to include provisions for unexpected changes, such as job relocations, illnesses, or significant shifts in a child’s schedule.

Example

Imagine this: You and your ex-spouse, Sarah, have a solid parenting plan that gives her primary custody while you have weekends and holidays. A year after the divorce, Sarah gets a promotion that requires her to relocate to Atlanta. Your agreement doesn’t address how to handle relocations, and Sarah moves without seeking court approval. Suddenly, your weekend visits are impossible without extensive travel, and you’re forced into a costly and stressful legal battle to modify the original plan.

How to Avoid This

To avoid this situation, include a clause in your parenting plan that outlines how you will handle relocations. Require advance written notice of any planned move beyond a specified distance and establish a process for using mediation to adjust the parenting schedule if such a move happens. By proactively addressing potential changes, you can save yourself the emotional and financial toll of another court battle.

Division of Debts Beyond the Basics

Divorce isn’t just about splitting assets—it’s about dividing liabilities, too. Florida is an equitable distribution state, as outlined in Florida Statutes § 61.075. While many agreements address major debts like mortgages and car loans, smaller liabilities such as credit card balances, personal loans, and medical bills are often overlooked.

Example

Let’s say you and your ex-spouse, Mark, agree to split the mortgage evenly. However, your divorce agreement doesn’t address the $15,000 in credit card debt you accumulated together. Months later, you discover that Mark has stopped paying his share of the credit card bill, tanking both of your credit scores. Since the agreement didn’t specify who was responsible for this debt, you’re left to deal with the fallout.

How to Avoid This

In your agreement, be sure that you have listed all debts—large and small—and assign responsibility for each. Include timelines for transferring joint accounts into individual names to prevent future conflicts. Additionally, consider requiring both parties to provide proof of payment for jointly held debts until they’re paid off.

4. Retirement Accounts and Hidden Financial Pitfalls

Dividing retirement accounts is one of the most complex aspects of divorce. Florida Statutes § 61.076 requires the equitable distribution of retirement assets, meaning they must be divided fairly but not necessarily equally. However, many divorce agreements fail to address critical details, such as the handling of Qualified Domestic Relations Orders (QDROs) or other less obvious benefits like pensions.

What Is a QDRO?

A Qualified Domestic Relations Order (QDRO) is a legal document required to divide certain types of retirement accounts, such as 401(k)s and pensions, during a divorce. You will often it pronounced as "QUAD-ro". It is essentially a court order that instructs the retirement plan administrator on how to allocate the benefits to the non-employee spouse, known as the alternate payee. Without a QDRO, you cannot access or split these funds without potentially incurring significant penalties and taxes.

How Does a QDRO Work?

The QDRO process involves drafting, reviewing, and obtaining approval for the order. It must meet specific legal and plan requirements to ensure compliance. Once approved by the court and the retirement plan administrator, the alternate payee can typically choose how they wish to receive their share—either as a lump sum rolled into another retirement account or as periodic payments.

Costs and Expenses

Drafting a QDRO often involves additional expenses. Attorneys or specialized QDRO services typically prepare the document, with costs ranging from $1,000 to $2,500, depending on the complexity of the retirement plan. Some plans also charge administrative fees for processing the QDRO. It’s crucial to clarify in your divorce agreement who will bear these costs to avoid disputes. Typically, couples split the cost evenly, but you can structure it in any mutually acceptable way.

Complications with Dividing Pensions

Dividing pensions can present unique challenges, especially for government or military plans with their own rules and restrictions. Common complications include:

1. Valuation Disputes: Determining the present value of a pension can be complex and may require actuarial expertise. Disagreements about its worth can delay proceedings.

   
   

2. Timing of Payments: Unlike 401(k)s, pensions often pay benefits only after the employee retires, which means the alternate payee may have to wait years to receive their share.

   
   

3. Survivor Benefits: If not addressed in the QDRO, the alternate payee may lose survivor benefits, leaving them with nothing if the pension holder dies unexpectedly.

   
   

4. Plan Restrictions: Certain pensions, like military or government plans, may not allow direct transfers, requiring alternative solutions.

   
   

Example

You and your ex-spouse, Rachel, agree to split her 401(k). However, your divorce agreement doesn’t specify who will pay for the QDRO preparation. When it comes time to divide the account, Rachel refuses to cover these costs, leaving you to foot the bill. Additionally, the QDRO fails to account for the tax implications of early withdrawal, resulting in unexpected financial penalties for you.

How to Avoid This

Make sure your divorce agreement is comprehensive when it comes to retirement accounts. Specify who will draft and pay for the QDRO, outline how the division will occur, and address potential tax implications of withdrawals. Include language to protect survivor benefits in pensions and consider consulting with financial and legal professionals to identify all divisible assets, such as military pensions or deferred compensation plans. By addressing these details upfront, you can avoid hidden financial pitfalls and ensure a fair distribution.

An experienced family law attorney has the the requisite experience to address all of these concerns and help you prevent all of these pitfalls.

Don’t Miss an Important Problem in Your Divorce Agreement

Divorce is never easy, but failing to address these commonly overlooked issues can make it even harder. By working with an experienced family law attorney like those you will find at Jarbath Peña Law Group, you can ensure your divorce agreement is as thorough and forward-thinking as possible. Remember, the goal is to protect yourself and your family from unnecessary stress and conflict in the years to come.