During your divorce, you and your spouse will have to reach agreements as to how to split assets and debts. Everything you both agree to will be written in your divorce decree, which is the final document you will get when the divorce is finalized. To ensure that spouses follow the rules of division, the decree may include indemnity clauses. Here are two things you should understand about these clauses.
The Purpose Of Them
The purpose of indemnity clauses is to make sure each spouse knows what he or she is entitled to and obligated to. For example, if you and your spouse own two cars, the divorce decree may state that you each get one. It will state which one the wife gets and which one the husband gets, and it will also include indemnity clauses.
An indemnity clause will typically state that the husband:
- Will receive the car (with its description)
- Is responsible for making all payments on it
- Cannot hold the wife responsible for any debt associated with it
- Does not have to share proceeds of it if sold
There would also be an indemnity clause to state the wife's vehicle as well as her responsibilities and rights to it.
How They Work
The benefit of indemnity agreements in a divorce decree is that they hold each spouse responsible for certain debts. If there is a problem with a debt listed on the decree, the couple can go to court, and the judge will rule based on the information on the decree. In other words, an indemnity clause is valid for issues the husband and wife may have with each other over assets and debts.
The downside to an indemnity clause is that it does not involve third parties. If the husband stops making the payments on his car and the loan was in both names, the lender can still come after the wife for these payments. These missed payments can also affect the wife's credit report.
If you want to avoid problems like this, you may want to have your divorce lawyer fight to have an additional requirement in the decree. This additional requirement would give your ex-spouse a certain amount of time to refinance the loan into his or her own name. As soon as your ex-spouse does this, the lender would no longer be able to come after you for this debt.
Trying to figure out how to divide assets and debts in a divorce can be tricky, which is why attorneys often use indemnity clauses. To learn more about this, contact a divorce lawyer today.