When divorcing spouses reach an out-of-court settlement, they need a document that will capture the terms of their agreement and ensure the deal will be honored. A marital settlement agreement is an agreement to settle some or all of the economic claims that may arise in a divorce action, such as the division of property, alimony, child support, legal fees or other rights. In Pennsylvania, a marital settlement agreement requires full and fair disclosure to the extent the spouses do not have personal knowledge of the nature and value of their marital property. The Divorce Code of Pennsylvania authorizes the courts to treat marital settlement agreements much like court orders in enforcement proceedings. Most provisions of a marital settlement agreement (other than custody and child support) are presumed to be nonmodifiable unless the agreement provides otherwise. For this reason, it is very important to ensure that a marital settlement agreement is complete and accurate.
What is full and fair disclosure?
In order to be enforceable under Pennsylvania law, a prenuptial agreement must contain full and fair disclosure of both spouses’ assets, income and debts. This is necessary in order to ensure both parties have given their informed consent to the terms of the agreement and understand what they are giving up and what they are getting by signing the agreement. The same standards generally apply to marital settlement agreements. Full and fair disclosure may be accomplished in a number of ways, such as attaching schedules of assets and their values to the agreement. Valuation of the assets need not be exact, provided the schedule of assets gives a reasonable and accurate picture of the financial resources of both parties.
It is important to note prenuptial agreements and their enforcement is a matter of state law which varies between states. Given the mobility of married people today, it may be worthwhile to consider the contractual requirements of other states where a married couple is likely to reside during their lifetimes. Some states require more than just full and fair disclosure when called upon to enforce prenuptial agreements. In those states, the agreement must make a reasonable provision for the dependent spouse. Some states utilize different methods for dividing marital property or community property. Careful consideration should be given to the possibility that a married couple may relocate to a state having different contractual requirements for prenuptial agreements.
What should be included in marital settlement agreements?
Settlement agreements are those agreements resolving the issues before the court for determination at a pending hearing or trial as well as a document that is negotiated and signed before one of the parties files for divorce. In the latter case, the actual divorce complaint and decree are simply final legal elements to the overall case; the heavy lifting of exchanging information and negotiating the division of assets is all done beforehand. Often this is a more humane way to resolve a marital dissolution, as it eliminates one of the parties receiving a surprise divorce complaint when the assets they will receive and the support they receive are all unknown.
At Pollock Begg Komar Glasser & Vertz LLC, we believe the best settlement agreements — whether before trial or before the filing of divorce, are negotiated from a positon of strength, which means with as much reliable information as possible and with as much preparation as possible. In this manner, we have sufficient information with which to advise our clients and are settling not because we are not ready for trial but because we are. The lawyers at Pollock Begg are often asked to opine on settlement agreements before they are executed by the parties as a second opinion or to ensure no important issues were overlooked.
If you have concerns about the settlement you are about to sign, or you prefer for another lawyer to examine the agreement and discuss its effect on your particular circumstances, call the lawyers at Pollock Begg to schedule an appointment. Make sure to forward your agreement in advance of the meeting.