Importance of Drafting a Clear Property Settlement Agreement
Most divorce matters are ultimately resolved without the need for a trial. The terms, conditions and obligations of the parties are typically contained within an agreement called a Property Settlement Agreement or a Marital Settlement Agreement. It is extremely important that the terms, conditions, rights, liabilities, and other important terms are clearly and definitively explained in the agreement. While Courts typically do not review such agreements when the parties sign them, the agreements must be carefully followed by the parties. In the event a party fails to follow the agreement, such party may be responsible for the other parties’ damages including, but not limited to attorney’s fees and costs.
In a recent case, the New Jersey Appellate Division reviewed provisions of an agreement which contained terms that were inconsistent with one another and therefore required a hearing to determine the parties’ true intentions.
In Gilmore v. Salem, 2016 W.L. 1192725 (March 29, 2016), the parties who had three (3) children during the course of their marriage, were involved in a divorce action, which was settled in a comprehensive Property Settlement Agreement. One of the provisions of said agreement provided that the parties acknowledged their respective responsibilities to contribute to their children’s college education, with consideration of the respective income and assets of the parties and the child.
The agreement continued: the remainder of the children’s college expenses shall be paid in proportion to the parties’ income, which shall include alimony payments/receipt at the time each child matriculates.
The Court began by explaining that resolving marital disputes through agreements that are voluntarily executed is greatly favored by various by public policy considerations. While agreements must be viewed and enforced with regard to both public policy concerns as well as legal ramifications, the intent of the parties’ should be carried out. The Court also noted that it has discretion to modify agreements where change in circumstances would render enforcement unfair.
In reviewing the specific Property Settlement Agreement at hand, the Court noted that its terms were unclear. While the agreement states that the respective income and assets of the “parties and the child” should be considered with regard to college expenses, in another section, it states that college expenses “shall be paid in proportion to the parties income which shall include alimony payment/ receipt at the time each child matriculates”. Consequently, while the former provision requires a broader consideration than just income itself, (i.e. assets are also to be considered) the latter provision isolates income as the only variable.
The Appellate Court held that to properly and accurately effectuate the parties’ true intention in signing the agreement, a hearing is required to arrive at the parties’ intentions and desires to settle the inherent inconsistencies.
The importance of the holding in Gilmore cannot be overstated. While agreements are an important tool that can be used to fairly and inexpensively settle marital disputes, they must be written clearly so that there are no inconstancies or unclear provisions so as to carry out the parties’ intentions. Otherwise, the agreement may not accomplish the goals that the parties had in mind when it was negotiated, drafted and ultimately signed. This could lead to results that are contrary to the parties’ intentions and expensive litigation could result.
At Leopold Law, L.L.C, our New Jersey property settlement agreement attorneys have more than 25 years of experience in handling all types of family matters. We have experience in drafting all types of agreements so as to clearly, accurately, and fairly carry out your intentions and protect you and your family.