Separation and Marital Agreements – Important Concepts to Know

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The process of negotiating and preparing a marital settlement agreement (or property settlement agreement) can be overwhelming for most clients. Potentially you are being asked to absorb and process a significant amount of complex information that can determine your individual rights relating to the most important aspects of your life. And for some, you are doing this in the midst of a highly emotionally charged situation. One way of dealing with this is to make a concerted effort to understand some of the common concepts involved in marital settlement agreements.

1. Once you sign, chances are it is permanent. While it is true that certain aspects of a settlement agreement may be modifiable in the future (such as spousal support, child support, or custody and visitation), many other parts of the agreement may not be able to be modified in the future.

In some cases clients may feel that they have been subject to “duress” or some other improper influence in signing the agreement, and ask about using this as a basis for changing or setting aside the agreement. It is important to recognize that feeling pressured to sign an agreement and the “duress” necessary for a court to set aside an agreement are often two different things. The law that governs when duress is enough to set aside an agreement sets a very high standard for courts to follow before an agreement can be invalidated. Therefore signing an agreement and later claiming duress in the hopes of changing or undoing the agreement can be a very risky proposition.

Further, thinking that the agreement can simply be changed at a later date is often ill-advised. In most cases, once an agreement is signed, your ability to go back to Court to address issues will be waived. Therefore, the takeaway here is if it is going to be permanent, make sure you fully understand everything involved before you sign. The best approach involves working closely with your attorney and taking the time necessary to understand the issues involved.

2. In most cases, the agreement becomes part of a court order. Typically the separation agreement will become part of the “Final Decree of Divorce” or some other court order. This has important implications when it comes to enforcement.

Because the agreement becomes a court order, violation or non-compliance with the terms can be a more serious matter. Failure to follow a court order can lead to a finding of “contempt” of Court. Being found in contempt can result in several negative outcomes. It is possible that you can be forced to pay the other side’s attorney’s fees incurred in securing your compliance (e.g. you pay their attorney for having to bring you to court to enforce the agreement). In some cases, contempt can result in jail time. Because compliance with the agreement (and eventual order) potentially carries these kind of penalties, this is another reason to work closely with an attorney to ensure that you understand the agreement and are able to comply with it before signing.

3. Deadlines are your friend. Your agreement is probably going to specify a number of things that each of you will be doing in the future: selling or refinancing the house; rolling over retirement plans; paying off credit cards; etc. Any time there are things to be done in the future, deadlines are your friend. Without them, things may drag on for far longer than you anticipated.

4. Keep it Simple, Soldier. As lawyers we often have a ‘standard’ way that we do things when it comes to particular issues. The reason for this is often that we have found a system that works for addressing issues that come up regularly in the cases that we deal with. In some cases, however, clients may feel the desire to come up with creative solutions. Working with your lawyer to attempt to come up with creative solutions is always a good thing. However, it is important for clients to be wary of ‘reinventing the wheel’ or creating overly complex solutions. If an arrangement has ‘too many moving parts’, then the possibility of a breakdown can increase significantly.

5. Appreciate that there are hidden technicalities that must be addressed. With the significant amount of information available, it can be tempting for clients to become overconfident in their understanding of the issues involved. Some clients may even think they are capable of handling everything themselves, using templates obtained from the internet. However, the old saying that a little knowledge can be dangerous applies. Are you confident in the language regarding modifiability of spousal support and its implications? What about language dividing retirement accounts? Are you confident that the language you are proposing to divide a 401(k) will be accepted by a plan administrator if you are using a Qualified Domestic Relations Order (“QDRO”)? What about waiving equitable distribution? In other words, no matter how much research you do on your own, appreciate that there may be issues you are not prepared to deal with. This is why it is almost always advisable to find an experienced attorney that you can work with to help resolve your case.