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Couples Must Obey Separation Agreement

The Law Corner

Even if the circumstances change...

 A typical separation agreement may include a division of property, alimony, and child custody. In many cases, the alimony and custody rules can be modified at a later date if circumstances change. However, a property division usually can’t be modified – even if unforeseen circumstances mean that one spouse got a much better (or worse) deal than anybody expected. 

 For instance, when an Alaska couple split up, they had to figure out how to divide some stock that they jointly owned in two companies. They decided that the husband would get the stock, and he’d pay his wife a total of $50,000 for it in a series of installments over time.   

 Eventually, the husband fell behind on the payments, and the wife sued. 

 The husband argued that he shouldn’t have to pay the rest of the $50,000, because the companies weren’t profitable, the value of the stock had declined, and his shares were no longer worth $50,000. 

 But the Alaska Supreme Court sided with the wife. It said the couple had both agreed on the value of the stock at the time of the divorce, and they both bore the risk that they might be wrong. It noted that the husband would have to pay the same $50,000 regardless of whether the stock turned out over time to be worthless or to be worth a fortune. 

 In another case in Georgia, a divorcing husband agreed that he would refinance the couple’s home by a certain date in order to remove his wife from the mortgage. This was done so the wife would have an easier time obtaining a mortgage for a house of her own. The couple’s agreement said that if the husband didn’t refinance by a certain date, he’s have to pay his wife a $10,000 penalty. 

 However, shortly afterward the bottom fell out of the real estate market, and despite his best efforts, the husband wasn’t able to refinance in time. The wife demanded $10,000. 

 A judge initially gave the husband more time, saying the soft real estate market wasn’t his fault. 

 But the Georgia Supreme Court overruled the judge and ordered the husband to pay the penalty. The court said the agreement meant what it said, and since there was nothing in the agreement that conditioned the $10,000 payment on the real estate market remaining strong, the husband was on the hook for the money.

 Sometimes it’s not clear whether something in a divorce agreement is about support or property division – and therefore, whether it can be modified later. For instance, in a recent South Carolina case, a divorcing husband was required to pay for health insurance for his ex-wife until she either remarried or obtained employer-based coverage. Six years later, after the husband lost his job and suffered a disability, he asked a court to end this requirement. The wife argued that the health insurance clause couldn’t be modified. But the South Carolina Supreme Court agreed said that the obligation to pay for health insurance was “support,” not a division of property, and therefore it could be modified if circumstances had changed. 
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