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The importance of being specific in a divorce agreement

No two Colorado residents will have the exact same experience if and when they end a marriage. A divorce settlement is a document that details the specifics of all aspects of a divorce, from child custody and property division to a multitude of lesser issues. Even for couples who have a relatively simple divorce, it is absolutely imperative to ensure that the resulting agreement is as specific as possible, especially where money is concerned.

This point is illustrated by the divorce agreement between actor Johnny Depp and his former wife, Amber Heard. As part of the couple's settlement, Depp agreed to pay $7 million to the American Civil Liberties Union and the Children's Hospital Los Angeles. He wrote those checks shortly after the settlement was reached, but he issued the payments directly to the organizations rather than sending them through his former wife. That gave him the ability to reduce his federal tax obligation by an estimated $3.5 million.

Heard protested, stating that Depp should have factored the tax benefit into the charitable contributions and paid an amount closer to $14 million in order to truly be out the agreed-upon $7 million. However, her complaints are likely to fall upon deaf ears, as the divorce is complete. Signed, sealed and delivered.

Of course, most Colorado residents won't have to contend with the tax consequences of a $7 million charitable contribution. Even so, each divorce has a number of different financial ramifications, all of which should be carefully considered while negotiating and drafting the agreement. It is incredibly difficult to revisit the conditions of a divorce agreement once the matter has concluded, and the cost of doing so can often make the process a losing proposition.

Source: Money, "Johnny Depp, Amber Heard, and Your Divorce", Lily Vasileff, Oct. 19, 2016

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