Various Agreements that can be Made to Lower the Cost and Reduce the Conflict in Dissolution or Separation
As discussed in our article “Legal Options for Ending Marriage in California: Summary Dissolution, Dissolution, and Separation” [Link to Article] there are three (3) methods of ending your relationship with your spouse: (1) Summary Dissolution, (2) Legal Dissolution, and (3) Legal Separation:
Summary Dissolution – This form of quick dissolution is only available to a small number of married couples and has the following requirements: (1) You Have Been Married Less Than Five Years; (2) Your Wife is Not Pregnant, and There are No Children from the Marriage; (3) You Do Not Own, or Have an Interest in, Any Real Property; (4) You Do Not Owe More Than $5,000 in Debt That Was Acquired After Marriage; (5) The Marital Community Has Not Acquired More Than $25,000 of Property; (6) Neither Spouse Owns More Than $25,000 in Separate Property; (7) Neither Spouse Will Receive Spousal Support; (8) Both Parties Agree to Sign the Joint Petition; (9) At Least One Party Must Have Resided in California For At Least Six Months; and (10) Prior to Filing the Joint Petition for Summary Dissolution of Marriage, an Agreement Relating to the Division of Property and Debts Must Have Been Signed.
Legal Dissolution/Legal Separation – This is the standard Dissolution and requires: (1) At Least One Party Must Have Resided in California For At Least Six Months; The Filing Party Has Filled Out, Filed, and Served the Proper Documents (FL-105/GC-120, FL-100,110,140,141,142,150,160, and 311), and (3) the Filing Party Has Completed the California Divorce Waiting Period of Six Months. Read the article discussing these requirements here [Link to Article].
For purposes of this article, a Legal Dissolution can only end one of two ways: (1) The initial party files for dissolution, and the other party does not contest the divorce; the parties reach an agreement as to all the important questions, and the Court grants a dissolution pursuant to the terms of that agreement – this is known as a “Marital Settlement Agreement” or “MSA”, or (2) The initial party files for dissolution, and the other party contests the divorce; the parties engage in protracted litigation, and the Court ultimately enters an order granting dissolution and resolving all the important questions for the parties. This article focuses on the first option, and what issues should be resolved in your Marital Settlement Agreement, or MSA.
The benefits of a Marital Settlement Agreement are substantial. A Marital Settlement Agreement is a contract, and is treated as such; thus, your MSA could address virtually any issues that might come up in the future. In contrast, if the Court is required to resolve critical issues, the Court will only address major issues, which leaves several issues that could become major issues in the future – bringing both parties back into Court long after they have moved on.
As a contract, MSAs generally include clauses pertaining to nearly every conceivable event, and frequently exceed forty (40) pages. As such, it is incredibly important to have a skilled attorney assist you in drafting every aspect of the agreement. While it is entirely possible for individuals to draft their own Marital Settlement Agreement, it is likely that many critical issues will remain unaddressed, The attorneys at Maples Law Firm have years of dedicated experience assisting individuals in drafting Marital Settlement Agreements that will resolve any, and all, issues that arise once your divorce has been finalized for years. While this article will not address every single provision that can be included in a Marital Settlement Agreement, it will address five (5) components that you cannot afford to omit.
- Make the Terms of Alimony Clear
In many circumstances, both parties to a dissolution are making a similar income. In those cases, alimony is unlikely to be an issue. However, this is not always the case. Life circumstances change, and sometimes one spouse has a higher earning capacity or obtains a higher paying job as a result of the efforts made during the marriage. As a general rule, everything done during the marriage belongs to the marital community. Thus, if your spouse attended school during your marriage, while you paid the bills and took care of the home, the marriage increased their earning potential and belongs to the marital community.
In these circumstances, it is important to detail alimony obligations, when those obligations arise, and how those obligations can change.
EXAMPLE: Wendy and Harry were married 6 years. During this period, Harry attended school for a psychology degree, and Wendy covered most of the bills. Shortly after graduation, but before Harry obtains employment in his field, Wendy and Harry divorce. At that time, Harry and Wendy both make $50,000 per year. A MSA could state that until Harry obtains a higher paying position (either in his chosen field or elsewhere) he will not pay any alimony. The MSA can further state that once Harry obtains a higher paying position, he will pay alimony based on the difference in income and pursuant to a preset equation.
Failing to address every potential issue is likely to create “Post Judgment Litigation” or “PJL.” If the issue isn’t addressed, one spouse might make the very same argument underlying the example above, and the parties will be forced to litigate the issue in Court. An ironclad MSA can avoid unnecessary frustration.
- Make the Terms of Custody Clear
When the marriage resulted in children, through birth or adoption, it is imperative that you resolve every possible issue pertaining to custody and visitation in your MSA. In addition to this being common sense, nothing invites PJL more than disputes over children. To that end, it is critical that every minute detail of custody and visitation be addressed in your MSA.
It may seem silly, and even asinine, but important questions include: (1) What days and hours does each parent get their child? (2) Which holidays will the child spend with which parent? (3) Which school district is the child’s primary address? (4) What rules will be uniform through both households? (5) How will the parents resolve parenting disputes? (6) Where will the child spend their vacations? (7) What, if any, contributions will the parents make to their child’s college fund? (8) Who will pay for what extra-curricular activities? (9) How much child support will be paid? (10) How did the parties reach that number? (11) What will the parties do if they can’t agree on a particular course of action to avoid litigation?
The list above is not even close to exhaustive, but the point is that no detail is too small to include in your agreement if you want to avoid PJL.
- Clarify How Post-Divorce Disputes Will Be Resolved
Naturally, an MSA cannot resolve every single issue, no matter how hard the parties try. Thus, it is important to include language describing a procedure for resolving disputes, rather than engage in PJL. This could include mediation, therapy, or any other option that is invariably cheaper than going to Court and arguing a nuanced interpretation of the MSA one way or the other. Avoiding Court is preferable for another reason, preparing an MSA takes a lot of resources: time, stress, money, etc., An agreement of this nature should not fall apart simply because the parties cannot come to an agreement about how to disagree without incurring even more costs.
- Make the Division of Property Clear
Many married couples have acquired substantial assets throughout their marriage. Further, the nature of property tends to become incredibly complicated over the course of a long marriage. Taking the question of asset and liability division in front of the Court will necessarily require an incredible amount of time, discovery, and litigation. The more time parties spend in Court, the more expensive litigation becomes. The more expensive litigation becomes, the less property is left for the parties to divide at the end of the litigation.
To avoid wasting your own resources, the MSA should discuss every piece of property you own, and it should describe how it will be divided. When drafting the terms of an MSA pertaining to your assets and liabilities, it is incredibly important to have a skilled attorney review the terms of your agreement; some property’s value has the capacity to appreciate in a significant way, and you could inadvertently receive the short-end-of the stick if you are not diligent.
- Make the Allocation of Retirement Accounts Clear
Many couples have individual, and marital, retirement accounts. As mentioned above, everything acquired during marriage belongs to the marriage; retirement benefits are no different. If both spouses agree to keep their own individual requirements to themselves, the MSA should clearly reflect that intention. This agreement should be set forth in extreme detail, including the account number and the last 4 digits of the account holder’s Social Security Number (“SSN”).
Alternatively, the parties should set forth a procedure for how each retirement account will be disbursed (this is generally done through something known as a “Qualified Domestic Relations Order” or “DQRO”). Most companies have their own policy and procedure for creating a DQRO, and those procedures and policies should be researched thoroughly before executing your MSJ.
At this point, it should be clear that while an MSA is preferential to obtaining a Court Order, it can be incredibly complicated. To that effect, the attorneys at Maples Family Law are ready, willing, and able to assist you in drafting an MSA that will avoid PJL, and adequately represent both parties’ interests. At the end of the day, both parties want to move on with their lives, and Maples Family Law is here to assist you with that goal.