Marital Settlement Agreements

With the overwhelming majority of divorce cases resolving through a marital settlement agreement (MSA), care must be taken in the negotiation and drafting of the divorce settlement. General contract law does not always apply to such agreements because they are in part modifiable and are only enforceable to the extent they are just and equitable.

What the Marital Settlement Agreement Covers

The MSA creates the ability of the parties to maintain control of their destiny so that they can create and structure their own resolution. Issues often addressed include:

• Recitals explaining the facts and purpose of the agreement
• Reference to independent legal representation
• A provision regarding the effect of reconciliation on the MSA validity
• Division of property and debt
• Division of retirement benefits by a Qualified Domestic Relations order
• Allocation of deferred compensation by a Callahan Trust
• The effect of the agreement on property acquired after the date of execution
• Spousal support
• Child support
• Payment of support through the Probation Department, wage execution or directly
• Payment of medical expenses uncovered by insurance
• The nature of cooperation for exercising COBRA health insurance benefits
• Escalation clauses
• Child custody and parenting time
• Religious education of the children
• Surnames of the children
• Definition of an emancipation event
• Freedom to relocate or restrictions of removal from and within the state
• Allocation for college
• Security for payments owed by a party
• Filing of joint federal and state tax returns and allocation of tax benefits
• Life insurance requirements
• Contribution for counsel fees

In addition, the divorce settlement agreement can contractually obligate a party to obtain a religious divorce removing the issue from first amendment controversy.

In addition, the matrimonial lawyer should consider addressing the following procedural issues:

• Waiver of claims against the estate of the other
• Mediation of future disputes
• Arbitration
• Choice of law
• Impact of fraud or concealment
• Agreement to incorporate the agreement in the Final Judgment of Divorce

What Isn’t in a Marital Settlement Agreement

The settlement agreement cannot address items which would be contrary to public policy. Therefore, parents cannot waive by agreement the right to receive child support or provide for automatic changes in custody because doing so would be contrary to the best interests of children.

In practice, the agreement should be fair and equitable, voluntarily entered and free from duress. A party should understand the terms of the agreement and be represented by or voluntarily waive the right to independent counsel. The agreement should be the product of full disclosure of assets, liabilities and income or contain a waiver of the right to discovery. The MSA should never be the product of fraud. Although not required, it is best practice to reduce any settlement agreement to an actual written document or a consent order entered by the court.

In addition to the foregoing, the parties should attempt to quantify by dollars or narratively the nature of the marital standard of living and the baselines for how alimony and child support were calculated. This will help the parties and fact finder in addressing future modification applications especially in cases where there has been limited or no discovery or the cases where Case Information Statements have not been exchanged.

The divorce settlement agreement should also address the viability of any other agreements previously entered between the parties particularly if there are executory provisions contained therein as in the case where counsel fee contributions or other payments are owed a party from a prior agreement.