Marriage is a unique legal issue. A marriage can be thought of as both a contract between two people and a legal status. Splitting couples often use written agreements of various sorts when ending the marriage to create a unique arrangement that fits their relationship. This type of divorce contract can serve a few different functions.
Separation agreements that last
A divorce severs the legal bonds between two people, allowing them to go their separate ways (with some exceptions for things like alimony and child support). Some splitting couples do not want that. Military benefits, for example, often lead couples to remain legally married despite their desire to split. A couple can build up significant pension benefits that cannot be easily divided.
So, they may come to an agreement that they will remain legally married, but they may need to settle some issues for that kind of a relationship to work.
A long-term separation agreement will often require that each spouse will not bother the other one. The spouses are not allowed to incur debt in the other’s name, and each usually waives the right to inherit money from the other’s family.
In some states, these agreements can be approved by a court order, and that can make them enforceable by the court.
Otherwise, each spouse can potentially sue the other for breaching the contract, though not every state will respect a separation agreement.
Many of these so-called un-divorced couples simply do not want to deal with the drama of a divorce. Many say they enjoy attending occasional events together as a “Mr. and Mrs.,” but they do not like living together full time.
Billionaire Warren Buffett had one of these relationships. He was married to his wife, Susan, from 1952 until she died in 2004. They reportedly began living separately in 1977, though, and soon Buffett began living with a woman named Astrid Meeks, who Buffett married in 2016 after his first wife, Susan, died.
The three apparently had a quite amicable relationship, which surely would have been strained by fighting over a billion-dollar divorce.
Another common type of divorce contract is a settlement agreement dividing a couple’s assets. At the beginning of the divorce process, many people imagine fighting for their rights in court. That rarely happens. Instead, the vast majority of divorce cases (and all cases in general) are settled out of court. Executing that settlement requires a divorce contract of sorts.
Divorce settlement agreements can get incredibly complex, but they are most often a very simple form. The contract usually explains the couple’s assets, including things like cash, stocks, real estate, vehicles, and business ownership.
Liabilities like mortgages, auto loans, and outstanding bills are subtracted out.
The remaining assets are then divided up, usually about 50/50, but sometimes a couple will agree to a different split.
The settlement agreement is usually approved by the court before the final divorce decree is ordered.
A spouse that is earning more money may agree to make ongoing spousal support payments to the other as well. Child custody and child support issues may be handled as part of the settlement agreement, or that may be dealt with separately. Children are an ongoing obligation and a child’s needs will change over time, so those issues are usually dealt with separately from the division of property.