What Is a Marital Settlement Agreement?
A Marital Settlement Agreement or MSA is a written contract between both parties to a divorce action that resolves all issues of the marital action. The contents of a typical MSA involve the sale of marital assets, payment or division of liabilities, alimony, and a Parenting Plan (if there are under-age children involved). No matter how amicable or upset a party is with the other spouse, divorce negotiations consist of a fair compromise on the issues at hand.
While it is not required by Florida law to enter into an MSA resolving all issues prior to ultimate court intervention, it is recommended because it saves time, and especially money. Working toward a single document finalizing all aspects of a divorce saves parties money associated with court time and attorney’s fees. In addition, parties who can agree to a resolution outside of court time , create the record as to the specific terms of their agreement prior to the Court’s ultimate Final Judgment of Dissolution of Marriage. If there is a trial at the end of a divorce case, the parties must rely on witness testimony and oral representation as to the terms of the agreement. If there is no trial, the parties submit the MSA to the Court almost as an agreed upon Final Judgment of Dissolution of Marriage. Typically, divorce cases involve a lot of pressuring and dashing about for documents and witnesses. An MSA alleviates the pressure of a speedy trial. As in other types of cases, preparing for a divorce proceeding involving children requires preparation from both parties. Negotiations for the terms of the MSA create an opportunity for the parties to make the best decision for themselves and their children moving forward.
Essential Elements Of A Marital Settlement Agreement
Key components typically encompassed within a marital settlement agreement are property division, alimony, childcare, child support and attorney’s fees. These components will be briefly discussed, in summary form, in the following paragraphs.
Property Division
In most cases, the biggest asset of a couple is their home. Other assets might include bank accounts, stock and retirement accounts, pensions, automobiles, household furnishings and other personal property items. The Court will consider the parties’ financial needs when dividing property. A spouse who has the ability to financially support himself or herself, for example, may not require as much of a property division as a spouse who will be financially dependent on the other spouse after divorce. A Marital Settlement Agreement allows a couple to determine for themselves the distribution of property, simplifying the process. Other than alimony, typically there are no income tax implications related to the transfer of property between the parties.
Alimony is just another name for spousal support/alimony. In Florida, there are several types of alimony that might be appropriate in your divorce, including Bridge the Gap, Rehabilitative, Short-Term, and Permanent. Any spousal support arrangement may be determined by the parties in a Marital Settlement Agreement as well.
Childcare and Child Support
In Florida, a Party may pay both child support and child care if suited. Childcare services include daycare so that a parent is able to work or attend school. Florida Statute §61.30 provides for a presumptive guideline amount of child support; however, following the terms of such laws, the amount of each child support obligation would typically be set forth, automatically, in a Marital Settlement Agreement.
There may also be a need for the parties to agree upon how certain expenses should be divided amongst themselves, such as medical insurance premiums, unreimbursed health care costs, extracurricular activities and pre- or post-school care. Also, given the frequency of children changing schools as a result of divorce, the parties may want to agree upon which parent is responsible for getting them to school, paying for school supplies and clothes.
Requirements Under Florida Law
Florida Divorce Law requires that for a Marital Settlement Agreement to be enforceable that it must be: (1) voluntarily executed by both parties, (2) supported by adequate consideration, and (3) made in "good faith".
Marriage is regarded by Florida Courts as "a special kind of contract", and as a special kind of contract, there must be consideration for the agreement to be enforceable. Consideration is defined as the essence of a contract being that which is done or accepted by one party in exchange for something given, suffered, or promised by another. As the Florida Supreme Court stated in the case of DeLoughery v. Daniel, 75 So.2d 35 (Fla. 1954), "… the consideration for a contract really consists in the mutual promises which are exchange for one another."
While there may not be a tangible proof of consideration changing hands, consideration for a settlement agreement can be found in a "good faith" exchange. LeKang v. LeKang, 614 So. 2d 615 (Fla. 3rd DCA 1993). Florida Courts read the requirements for Contracts into Marital Settlement Agreements as they are viewed as a special type of contract. The marital settlement agreement must be voluntarily executed and supported by adequate consideration to be valid or enforceable.
Both spouses must sign the agreement voluntarily, and not under undue influence or duress. Kreiss v Kreiss 2018 WL 1090587 (Fla. 4th DCA 2/14/18) (finding that trial court did not err in refusing to enforce Marital Settlement Agreement where husband’s attorney abandoned representation and failed to honor subsequent agreement). In Keech v Keech, 634 So. 2d 757 (Fla. 4th DCA 1994), the Florida 4th District Court of Appeal held that a trial court is in position to determine if a marital agreement was entered into voluntarily or involuntarily.
The Florida Supreme Court stated the following concerning settlements in divorce cases: "[T]he final settlement agreement is a contract subject to the general rules of contract construction and interpretation." Pack v. Pack, 83 So.2d 546 (Fla. 1955). The first district similarly recognized that the contract principles controlled the settlement agreement issue in divorce cases. Harris v. Harris, 502 So.2d 1321 (Fla. 1st DCA 1987).
Why You Need Professional Legal Advice
When drafting or entering into a marital settlement agreement, it is imperative that both spouses seek the advice of a lawyer. Self-drafting agreements or a court approving an agreement drafted by one party is not discretionary – rather, it is mandatory. Fatigue after the fight, emotional turmoil and cost/benefit considerations can lead a non-represented spouse to believe it is in his or her best interests not to involve a lawyer. The opposite is true – non-representation works to the advantage of the stronger party. The non-drafting spouse will have diminished if not no ability to appeal a poorly written or improper settlement agreement, and will usually suffer from a complete lack of understanding as to the implications of the agreement. An agreement signed pursuant to the advice of a lawyer, in contrast, will bind both parties and "become the law of the case". In other words, it must be honored and followed. Seeking legal guidance is mandatory under the family law rules of procedure when a litigant seeks to settle his or her case. Even where preliminary divorce work has been conducted (i.e. production of documents, depositions, etc.), planning on doing extensive and costly discovery before engaging in settlement negotiations will not be permitted from the point of view of legal ethics. A party that has the wherewithal to, for example, fly to Europe for the purpose of engaging in months of divorce litigation will not be eligible to avoid accountability to the requirement to have a lawyer oversee the drafting of a divorce settlement agreement.
How To Prepare An Effective Agreement
The process of creating a marital settlement agreement is not a simple one but, when done properly, can be streamlined to produce a mutually acceptable agreement that meets your needs. However, without careful and thorough consideration of your assets and future goals, the process may falter leading to an expensive and unpleasant experience. The first step of this process is negotiation. Open discussion and meaningful compromise are essential to this discussion. The negotiation will hopefully continue until a full agreement with all the terms necessary for the settlement has been reached. After the negotiations are complete, the second step is drafting the settlement agreement. This requires attention to detail, as the agreement must contain all of the terms agreed upon in the negotiation. It is often helpful to go through the following checklist: • Are all of the significant issues addressed? For example, child care, vacations, transportation, custody and decision-making responsibilities. • Is there a reduction in child support for the sharing of holidays, travel, etc . with the children? • Are the provisions fair? • Are the provisions in the proper sections? (e.g. child support, alimony, equitable distribution) • Are the parties’ signatures and dates in place? • Do you have notarized acknowledgements? • Are you in full compliance with the Florida Family Law Financial Disclosures Rule? • Are the certificates of compliance with the mandatory disclosures attached? • Are there notes with respect to any issues that were unresolved in the negotiation? The third step is revision of the agreement. By the time you have completed the second step, you should have a complete list of the issues that need to be re-addressed in the negotiation. You are likely to have some unresolved issues that need to be dealt with at a later date. The final step is the signature and incorporation of the agreement in the final judgment. At this stage, the parties’ Florida divorce action has officially concluded. Your final judgment must include specific language that incorporates the settlement agreement. Any language that conflicts with the settlement agreement must be stricken from the final judgment.
Common Pitfalls And Mistakes
The following mistakes often accompany marital settlement agreements. By avoiding these pitfalls, your agreement will be more likely to be comprehensive and fair.
1. Failing to Disclose Assets and Liabilities
The biggest mistake of all is when a spouse fails to disclose all of his or her assets or liabilities to the other spouse. This mistake makes the entire agreement susceptible to being set aside following the divorce. Under the Florida Statutes, you are required to have a full and fair disclosure of your assets and liabilities. What this means in layperson’s terms is that, throughout the course of your marriage, your attorneys need to review all of your bank statements, credit card statements, mortgage information, vehicle information, retirement plans, loans, tax returns and other items which show how your assets and debts came into being. If during the process of getting divorced, you make a false representation of your income or your assets, a Judge can award your former spouse an extra 10% of your assets at the time of the divorce as a penalty for making a false representation.
2. Not Considering Tax Implications
Both alimony and child support require someone to pay a certain amount of money and there are tax implications for both the person paying and receiving them. When your marital settlement agreement is drawn, make sure that you consult with a CPA or other qualified tax professional with experience in these issues.
3. Exceeding Duration of Support
There are several types of support available, from alimony to child support. Some of these have a time duration during which they are valid (i.e. permanent alimony, rehabilitative alimony, child support, etc.). A marital settlement agreement must abide by these time periods. For instance, if you are ordering permanent alimony, your marital settlement agreement should last until you or your spouse die, you or your spouse remarry or you or your spouse enter into a substantial supportive relationship.
4. Not Covering All Aspects From A to Z
A marital settlement agreement must cover every single conceivable aspect of your divorce. It will be voided if one or both of you do not abide by the terms agreed upon in your agreement. So for example, it must cover how long you will stay in the marital home and how you will decide what to do if you cannot sell the home for a certain period of time. It must spell out exactly what happens to the marital home. It will also cover everyday details like how you will decide where to spend holidays or birthdays and choose the parent who will pay for the kid’s braces.
5. Making Any Provisions that Go Against Florida Law
Some things that you want in your marital settlement agreement may not conform to Florida law. In this circumstance, you should take out those provisions. For example, under Florida law, a judge cannot award a parent a timesharing schedule if there is an allegation of domestic violence. But if a judge determines at trial that there was violence, in that case a parent can still ask for supervised timesharing or no timesharing at all.
Amending A Marital Settlement Agreement
The enforceability and finality of a Florida marital settlement agreement is an important aspect to consider while your divorce is pending, before you sign the final divorce judgment. However, because uncertainty is a part of life, the law in Florida does provide mechanisms for changing even the "final" agreements, if circumstances change in the future.
Marital settlement agreements are treated like contracts, and may be modified by agreement of the parties. See Davidson v. Davidson, 20 So. 3d 880 (Fla. 4th DCA 2009). A court is bound to enforce such agreements, and may not modify them absent some enabling statute. Id.
Modification of agreements relating to equitable distribution of property can be obtained through the fraud, duress, or mistake exceptions to the general non-modifiability of final judgments. See Lindsay v. Lindsay, 613 So. 2d 570 (Fla. 5th DCA 1993).
Alimony payments may be modified upon showing of substantial change in circumstances. Fisher v. Fisher , 708 So. 2d 608 (Fla. 1st DCA 1998). Those changes include: changes in income, change in employment situation, and remarriage of the recipient of alimony. Goodman v. Goodman, 934 So. 2d 612 (Fla. 4th DCA 2006).
At times, substantial changes in the obligor’s financial position/ability to pay occur after the agreement was reached and should be grounds to modify the agreement. Zlotsky v. Zlotsky, 864 So. 2d 530 (Fla. 4th DCA 2004).
In Clark v. Lentz, 669 So. 2d 328 (Fla. 5th DCA 1996), the Court held that a marital settlement agreement cannot limit the trial court’s power to modify child support or custody. A court may declare a provision invalid as contrary to public policy, a question to be resolved in light of all relevant factors including harm to the child if the agreement were allowed to stand, harm to other interested persons, and whether there is a legitimate business or other purpose. O’Neil v. O’Neil, 906 So. 2d 1164 (Fla. 5th DCA 2005).