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Marital Settlement Agreements or Postnuptial Agreements

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Marital settlement agreements become an enforceable component of a final divorce decree and must be carefully drafted to anticipate all potential conflicts

By Attorney Jeffrey B. Engle, Divorce Lawyer, Harrisburg, PA

As a practicing divorce lawyer, my office routinely drafts marital settlement agreements ("MSA's") or sometimes called postnuptial agreements.  They are one in the same.  We have numerous clients that walk through the door with their own agreements that they have discussed with their soon-to-be ex spouse.  We need to sit down and craft them within the bounds of the law and carefully review what's a good idea and what's not.  Here are some topics to consider in a valid MSA (this is only a partial list and should not be construed as providing legal advice or opinion about a specific case):

  1. Disclosure. Full and fair disclosure of all income, assets and debts is the cornerstone to any valid MSA.  Failure to disclose income or assets can invalidate the agreement. The agreement should contain a disclosure provision, either couched in terms of an acknowledgment that full disclosure has been made to each by the other or an affirmative representation by each party that he or she has fully disclosed all assets and income.
  2. Opportunity to investigate or appraise. The agreement may reflect the fact that the parties had an opportunity to investigate, appraise or value all or some of the assets of the other party but have chosen not to do so.
  3. Release. It should be apparent from the MSA that the contents described therein contain a "release" from any future claims.  In other words, the MSA covers all claims from the marriage under the Divorce Code.
  4. Contingency or "self-destruct" clauses. The parties may wish to provide that the agreement is to be contingent upon entry of a decree in divorce and that it is automatically deemed null and void if a decree is not entered within a specified period of time.
  5. Waiver of estate rights. A provision citing the Probate, Estates and Fiduciaries Code to the effect that statutory rights are being acknowledged but are being modified or waived may be included.
  6. Waiver of rights under the Domestic Relations Act. A specific reference to the Pennsylvania Domestic Relations Act may be included with an acknowledgment of the existence of the statutory rights being modified or waived.
  7. Equitable distribution. All of the parties' marital property should be disposed of in one way or another in the agreement.  Where documents are required to effect a conveyance or transfer, such as deeds and car titles, the agreement should provide that the parties will execute whatever documents are necessary to implement their agreement.
  8. Mortgages. Refinancing, payoff, or sale of the real estate subject to the mortgage should be clearly listed in the MSA.  It is not enough to assume that if real estate is transferred from one spouse to another that an obligation to be solely responsible for the mortgage will follow with the transfer.
  9. Counsel fees and expenses. The agreement should include a provision regarding legal expenses in the event of breach, both as a remedy and as a deterrent to a party tempted to disregard performance under the agreement.
  10. Debts. The agreement should specifically reference any outstanding debts, either joint or separate, and which party is to pay them and when.
  11. Retirement benefits/insurance waivers. Waivers of a party's beneficial interest in the spouse's retirement benefits or insurance policies, or waivers of any other assets that require the execution of separate documents such as beneficiary designations or written waivers of the spouse's survivorship interest pursuant to the Retirement Equity Act, should be explicit and should require the waiver whether or not the employee spouse or owner of the insurance policy actually follows through on the other paperwork.
  12. Default. Provisions specifying remedies in the event of default or breach may be included. For example, if a default in installment payments is intended to permit a confession of judgment for the entire amount due and not just the past due installments, the agreement must contain an acceleration clause.
  13. Alimony and spousal support. Waivers of support or alimony should be specifically stated. The agreement should describe the tax treatment to be accorded to cash payments to the payee as well as third party payments for the payee's benefit, such as medical insurance, premiums, mortgage payments and so on, all of which may be treated as alimony for federal income tax purposes.
  14. Remarriage or cohabitation. If alimony payments are to terminate upon either the remarriage or cohabitation of the payee, the agreement must specifically so state.
  15. Child support. An agreement regarding child support, visitation or custody is subject to modification upward or downward by the court upon a showing of changed circumstances.  An agreement relating to child support that is against public policy or is unsupported by consideration may be unenforceable.
  16. Education. Provisions requiring the parties to contribute to the post-high school educational expenses of their adult children are enforceable.
  17. Custody. On theory that parents may not bargain away their children's rights, the court is not bound by provisions relating to custody and visitation, and these provisions are subject to modification upon a showing of changed circumstances.

Again, this is a partial list and should not be viewed as providing legal advice.  Every case is different and requires the skills of a licensed and practicing divorce lawyer to individually review your circumstances.  You may call Shaffer & Engle Law Offices, LLC toll free or email us today.  We can discuss a MSA with you in confidence and assist you in its drafting to tailor it to your specific needs.

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why needs Marital settlement agreements become an enforceable component of a final divorce decree and must be carefully drafted to anticipate all potential conflicts

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