Separation Agreements 101
A separation agreement is a type of contract that is used by spouses to settle their affairs in preparation for divorce. The purpose of a separation agreement is to clearly outline the arrangements agreed upon to divide property, assets, and liabilities such as debts and accounts. It also outlines how parenting responsibilities and decision-making will be handled after the couple moves forward with their own lives.
In addition to addressing assets and liabilities, a separation agreement can also include provisions covering matters like child and spousal support, personal belongings, and certain in-kind payments between the parties during the time they are physically separated. For example, if one person is moving out of the home, the separation agreement could address who pays the bills associated with that property , or what happens if one spouse is moved into a nursing home.
Separation agreements, like other contracts, can be modified when circumstances change such as when parents relocate, one parent remarries, or a child has special needs and requires additional support or more financial assistance than a parent was originally able to provide. In the event spousal support is included in a separation agreement, the court has the right to review and modify that support should circumstances change.
Separation agreements in family law may include the division of bank accounts and savings. In these cases, couples often agree on dividing the contents of a bank account, such as through a 50-50 split. In situations where there are multiple accounts, couples often agree to divide the money that is in those accounts, but to keep them open.
Grounds for Challenging the Separation Agreement
While the presumption of validity is a formidable obstacle to overcome, there are certain legal grounds under which a separation agreement can be overturned (or set aside) and effectively made unenforceable by the Court. Commonly cited grounds include: Fraud (or Fraudulent Concealment), duress, undue influence, mistake and lack of disclosure.
Fraud (or Fraudulent Concealment): As an attorney may have once told you, if it seems too good to be true, it probably is. During the divorce process, one spouse may have written a check (or deposits funds into an account) in order to make it appear – on paper – that they are getting the short end of the stick when it comes to the division of marital assets, while in truth the opposite is true. Hiding assets from the Court can be a form of fraud. If one party learned about, or had reason to know about, fraudulent activity on behalf of their spouse and then agreed to a settlement, it is possible to overturn that settlement.
Duress: Duress occurs when one party is forced (by threat of what is to come if they do not agree) to sign the agreement (or make a check out to cover the cost of some otherwise uncovered expense) in order to receive something (a new car, money to pay for rent, etc.) that is desperately needed. Unless it can be shown that this was occurring on a large scale (or intensive level over a long period of time), this is not often seen as a basis upon which to set aside a separation agreement.
Undue Influence: Generally speaking, undue influence is when one party uses their familiarity with the other to cause the other to act in a certain way. For instance, if there’s someone that your spouse really wants to have back around in his/her life, you may be able to use undue influence to argue that their desire is a result of a persons’ influence over them.
Mistake: If both parties make the same mistake in their negotiations to arriving at the separation agreement, it is possible that you would be given the opportunity to prove the fraud. Mistakes that go overturned are generally those that disproportionately benefit one party over another or those that would lead to extremely inequitable results.
Lack of Disclosure: In some cases, one party simply fails to disclose all of their assets to the other. An example of this might be an "off-the-books" business that generates revenue for the family. It’s very common practice for these persons to "pay themselves" using cash. This amount may be paid in whatever amount is needed to keep the books looking "normal." If a spouse is aware of what is going on, though not privy to specific amounts, they may be able to overturn the agreement on the basis of lack of disclosure.
Challenging the Separation Agreement
Once a separation agreement has been signed, the legal presumption is that it stands as the final word on the terms of your relationship and the division of your assets. But in certain circumstances, a court may allow you to challenge the terms of a separation agreement, especially if there is compelling evidence that the agreement was not entered into in good faith or that the terms are particularly egregious or unfair.
Legally speaking, the process of challenging a separation agreement begins with filing an application in your local Supreme Court to have the separation agreement overturned. At that point, the Family Court may appoint a lawyer to represent any child affected by the proposed order. The opposing party must be provided with a copy of the application and notification of the hearing date. Then, both parties can attend the hearing before the judge.
If the judge decides to look further into the validity of the agreement, they may set out a timetable for further evidence to be shared between the two parties, to be included in the Family Report, and to be given to the lawyer appointed to protect the best interest of the child. Once all evidence is collected, the judge will make the decision as to whether or not the terms of the separation agreement will stand in their present form.
It’s important to note that this process can take some time to play out, possibly even months. A written warning may be issued to the person who wrote the separation agreement, letting them know that they are prohibited from spending or dealing with the property, debts or money that are the subject of the dispute. An order may be sought barring this person from putting property out of reach or dealing in any way.
If the order is granted, the lawyer appointed for the purpose of protecting the child may then arrange for the child to be provided with an opportunity to express their wishes. Once the judge receives the Family Report, this same lawyer will notify the judge if the agreement is in the best interests of the child.
The judge then has the option of upholding the agreement, making some changes in the terms, or throwing out the entire agreement from a legal perspective.
This challenge to a separation agreement is just one of the many forums that exist for modifying or overturning them. It’s always a good idea to discuss your options with a family lawyer experienced in these matters if you ever have any concern about what to do about one of these agreements.
Mediation & Legal Representation
In the event that one party has a strong case for setting aside an existing separation agreement, then their current lawyer may be able to renegotiate some of the terms of the agreement without the need for any court proceedings. In general, if there are new circumstances that could negatively affect a child’s life, such as a parent’s relocation or a negative change in a parent’s job or house, it may be possible to reach new terms through negotiation without going to mediation or court.
For example, if a custodial parent wishes to relocate to another province, the non-custodial parent may be able to negotiate increased access to the child while the child stays in the same region in an effort to provide them with a degree of consistency, familiarity, and stability.
If a voluntary revision to the original order for both parents is successful, a filed record of that revision will be provided to the parties’ lawyers for a signed consent endorsement and a divorce judgment can be obtained through the Court with only one appearance.
The most common way that some changes may take place is through a mediation process where both parties meet with a professional mediator to negotiate specific terms of the separation agreement. Mediators are neutral, third-parties who seek to develop mutually beneficial solutions to conflict in a calm, logical manner. While they don’t provide legal advice, they work to facilitate a more productive discussion between you and your ex-spouse.
During the mediation process, issues that may be addressed include finances, property distribution, spousal support, child custody, access and support, insurance and any other issues currently affecting the child and all parties involved. The mediator will suggest solutions to the problems at hand and discuss these options with you and your ex-spouse. If you wish, they may work towards creating a written agreement that provides a framework for how to address future conflicts so that you can resolve these differences in a timely manner.
Through the help of a mediator and a knowledgeable family law attorney, it may be possible to avoid the lengthy and costly litigation processes that would otherwise be necessary in order to set aside a separation agreement without the other parent’s consent.
It may be possible to increase the likelihood of a successful negotiation of existing or future separation agreements by working with a skilled attorney who understands the complexities that come with bringing a former couple’s matter before the court. A family lawyer may be able to assist you in mediation, settlement conferences or even trial.
Statutory Limits and Timeliness
As with most areas of the law, there are time constraints when it comes to whether a separation agreement can be overturned. If one of the parties takes no action regarding the separation agreement for a significant amount of time, then the courts will be reluctant to allow the separation agreement to be overturned. All divorce actions are governed by the statute of limitations set forth in N.J.S.A. 2A15-3. When the statute of limitations has expired, the right to sue is barred. A one-year statute of limitations applies to actions for malpractice (e.g., legal malpractice, medical malpractice, residential real estate transactions, etc.). A six-year statute of limitations applies to actions for any contractual liability or written agreement. For actions for fraud, a general fraud statute of six years applies (as opposed to the three year statute which only applies to fraud against the government) . In addition to the discussion above, the statute of limitations is also applied to divorce pleadings such as a motion to vacate a judgment, a divorce complaint or a letter of representation. Though it seems that the statute of limitations would not apply to a motion (because there is no plaintiff or defendant), the Courts have equated motions with complaints. Now if a party moves to vacate a judgment after the expiration of the statute of limitations, the court will most likely deny the motion especially if eight years or more has passed. However, if a party enters into a Settlement Agreement with his/her attorney, the party can sue his/her attorney for negligent representation many years after the settlement agreement was executed. In fact, there are cases in which a minor child sues his/her parent who was responsible for hiring the attorney for the settlement agreement. Summary: A motion to vacate a Separation Agreement has to be made within six years of the date on which it was executed.
Consequences of Challenging the Separation Agreement
The implications of overturning a separation agreement, such as financial, custodial and reconcilatory considerations
The judiciary has made it clear that the interests of the children in family law matters come first. That being said, the judge’s hands are often tied to the evidence presented in court. The judge has discretion to change a child support order, or decide custody issues, however does not have authority to retroactively change a separation agreement. If a separation agreement is set aside then there could be a knock-on effect. The court could overturn spousal support and divide the property. The judge may order retroactive payments based on a dispute of income and impute income to one party. If a spouse is successful in setting aside the separation agreement then there is an opportunity to get a variation of prior relief from the court. The non-working spouse could go after spousal support. The parent could change the parenting schedule retroactively. The court could order a division of property. If there was a bad faith act between the separation agreement and the application day then the court would order the money to the innocent spouse. The amount of the misrepresentation is key to this outcome. If a spouse raises an allegation of unreasonable departure from a separation agreement then the ultimate result may be a higher award to the innocent spouse. The starting point for child support is the child support guidelines and any deviation has to be justified. If the deviation is not reasonable then it will not be granted no matter what. The court will consider the child’s best interests. Custodial issues can vary depending on the child’s age and needs. It’s important to get a psychological report from someone familiar with children’s best interest and independent (a third party). Parents cannot be competing and arguing about all the things that are happening. Emotion should be removed from the family law matter. An important consideration in family law matters is the facilitation of a settlement. In family law there are a significant number of potential outcomes, too many benefits and disbenefits.
How to Avoid an Invalid Separation Agreement
To reduce the risk of having an agreement overturned, individuals can take several steps to ensure that their separation agreement is fair, legally binding, and less likely to be challenged in the future. First, ensure that all terms are clearly communicated and understood by both parties. It is important that both spouses understand their rights and obligations under the separation agreement before signing.
Both spouses should be prepared to make full and frank disclosure of their assets , income, and liabilities, before signing. Failure to do so may result in legal challenges later. Additionally, spouses should take the time to fully review the agreement with their legal counsel to ensure it is fair and properly enforceable.
Of course, the best way to prevent a dispute regarding a separation agreement, is to take all necessary steps to conclude your settlement, with the guidance of your respective lawyers, as a negotiation and without further delay.