Think Before You Sign!

by Grant T. Moher

Most divorces, including contentious ones, do not end up in a final court hearing. Rather, they end with both parties signing an Agreement, often referred to as a “Property Settlement Agreement.” Agreements can resolve some or all issues between the parties—distribution of assets, payment of child and/or spousal support, custody and parenting time of children, apportionment of debt and a host of other things.

All too often, parties attempt to prepare Agreements themselves, without the benefit of professional help. Some parties sign Agreements prepared by their spouse’s attorney—without engaging an attorney themselves to review it.

Signing an unfavorable Agreement can result in massive problems—and a massive expense. Some of the costliest cases I have seen involved one party signing an Agreement they later regretted and ended up in litigation. The following are the eight most significant problem areas I have seen when parties have signed Agreements without having them reviewed by a competent family law attorney:

1. Believing an Unfavorable Agreement Can be Voided or Renegotiated. While it is possible in certain circumstances to overturn a signed Agreement between parties, those circumstances are extremely limited. And it is extremely costly and difficult. Virginia law favors Agreements, and Virginia courts will rarely overturn an Agreement, even where its effect is severely unfair.

2. No Ultimate Disposition of Assets and/or Debts. Parties may unwittingly fail to provide for the ultimate disposition of assets and debts in an Agreement. The marital home is often an area where this occurs. I have seen Agreements that provide for the payment of a monthly mortgage and utilities, but which provide nothing for the ultimate disposition of the home. Will one party buy the other out? Will it be sold? Sometimes, parties provide that one of them gets the home, but they don’t make any provision to remove the other from liability on the existing mortgage via refinance or another mechanism. This can be a major problem for the party remaining on the mortgage, as they could remain on it (with the monthly debt remaining on their credit report) for a very long time.

3. No “Standard” or “Boilerplate” Provision. Many of the “standard” or “boilerplate” provisions commonly used by family law attorneys in Agreements are not present in homemade agreements. These provisions can include enforcement mechanisms, requirements to complete necessary follow-up documents (like waiver forms to be the survivor beneficiary on retirement assets), safeguards against non-disclosure of assets, waivers of inheritance rights and many other important safeguards. They can prove invaluable in the enforcement process if one party is not living up to their end of the Agreement.

4. May Contain Oppressive Future Obligations. Often, things that sound good at the time of signing an Agreement may prove disastrous years down the road. For example, many parents would agree that paying for a child’s college education is a worthy goal and often parents agree to obligate themselves to do so in an Agreement. Such an obligation, if not properly defined, can prove disastrous. What if the child does poorly in college, or takes many years to graduate but does not care, because he or she knows both parents must pay no matter what? What if you object to the institution, cost of tuition or course of study? What if the Agreement is signed when a child is very young, and the parents’ financial circumstances have changed drastically when the time for college comes? Poorly-defined obligations to pay for future expenses can be extremely problematic.

5. Not Defining Temporary or Permanent Obligations. On occasion, a party presents me with a signed Agreement with provisions that one party thinks are permanent and the other thinks are temporary. If an Agreement doesn’t specifically provide termination dates for obligations, those obligations (like for payment of a mortgage, payment of support, etc.) may very well not terminate.

6. Containing Contradictory or Vague Terms. Contradictions or vague terms in an Agreement can be tremendous problems. Their presence can often give leverage in negotiation to a party seeking to vary the terms of an Agreement. Ultimately, if the parties can’t agree on a resolution of contradictory or vague language, the Court must be called upon to make a decision.

7. “Agreements to Agree.” Many agreements contain non-binding language which merely sets out what the parties expect to do, not what they are required to do. In some cases, sections like this are fine. In many cases they are not, and can lead to litigation of what should have been resolved issues.

8. Signing the Agreement for Reasons Other than Resolving Marital Issues. The only reason to sign a Property Settlement Agreement is to resolve issues relating to the dissolution of your marriage in a way that you feel you can live with. Many clients have come to me after they signed oppressive agreements and let me know that they signed those agreements for other reasons. For example, out of guilt for something they did to lead to the breakup, out of a desire to “just get things over with” no matter the cost, or out of a belief that if they signed the agreement, their spouse would return to them (as counter-intuitive as it sounds, I have seen this more than once).

The bottom line is: you should never sign any Agreement without having it reviewed first by a competent family law attorney. If you’re considering preparing a Property Settlement Agreement, or your spouse has prepared one and has given it to you, give us a call—we’re here to help.