Separation agreements are a useful tool for couples that are interested in pursuing separate lives or potentially obtaining an uncontested divorce. These agreements can assist a couple in proceeding with separation or divorce in a less contentious environment.
1. Definition and Purpose of a Separation Agreement
Separation agreements, also referred to as marital settlement agreements, are contracts between two married parties for the purpose of determining issues that would arise from ending the marriage. A separation agreement does not divorce the couple, but it decides issues such as property division, that would allow a couple to go through an uncontested divorce if they decided not to reconcile.
2. Voluntary Agreement
Separation agreements are entirely voluntary. The two parties work together to come to an agreement on all issues arising under the marriage. If you proceed with a divorce, you can ask the court to incorporate the separation agreement into the judgment of absolute divorce. As a result, if the agreement is incorporated it would become a part of the Judge’s Order, and no longer solely contractual in nature.
3. Contents of a Separation Agreement
In your separation agreement you will want to settle all of the issues arising under your marriage. These include, but are not limited to, the following:
- Property division
- Child Custody (visitation, access, etc.)
- Child Support
- Alimony
- Retirement Benefits Distribution
- Health Insurance
- Life Insurance
- Use and Possession of the Marital Home
- Attorney’s fees
4. Legal Considerations
A separation agreement is a contract. Before signing any contract, it is a good idea to work with an attorney. This will help ensure you have a full understanding of your rights and what your agreement stands for. This can also help to ensure that you have fully dealt with all of the issues under the marriage to prevent having to renegotiate with your spouse over pending issues if you decide to proceed to an uncontested divorce. Both parties having representation can also protect the validity of your agreement. This can help to prevent an opposing party from trying to invalidate the contract through claiming fraud, misrepresentation, or undue influence, etc.
5. Child Custody and Support
Separation agreements with provisions covering child custody will specify legal and physical custody. Legal custody entails who is going to make the major decisions for the child. If the couple has joint legal custody, the separation agreement may include what process the parents will go through when they cannot come to a decision together for the children. Possible processes are attending a session of mediation, working with a parenting coordinator, or tie-breaking authority to one parent. A parent with tie-breaking authority must discuss major decisions with the other parent but has the power to make the ultimate decision.
Physical custody will determine which parent has an obligation to provide a home to the child and to make the day-to-day decisions while the child is in their care. If there is joint physical custody, the agreement will have provisions providing for the visitation or access schedule. This will include but is not limited to provisions detailing which days the children are with each parent, which holidays each parent spends with the children, method and location of transition between houses, when parents can take the children on vacation, and right of first refusal to the other spouse when one parent is unavailable to care for the children.
Provisions providing for child support will include, but are not limited to, the amount paid, the due date, method of payment, and terminating events such as the death of a parent or child, or when a child reaches the age of majority. The agreement can also contain provisions on how the parties will split the expenses for the children (for example, 50-50, pro rata based on the spouse’s relative incomes, etc.) There are public policy considerations when it comes to payment of child support. If the parents are under a certain monthly income amount, then the Maryland Child Support Guidelines would be mandatory in court. Judges play a role in protecting the best interests of the children. If they review an agreement containing an award below what the Guidelines would recommend, the court may have a duty to modify the agreement if the agreement is not in the best interests of the children.
Any provisions of the agreement relating to child custody or support are always modifiable in court under a material change of circumstances. A material change in circumstances could look like a parent losing their job, an increase in salary for one parent, a change in a parent’s work schedule, etc. Provisions regarding the care of children such as custody and support cannot be fully contracted out, because the court’s guiding principle is the best interests of the children. It is not uncommon to include provisions in the separation agreement regarding the payment of child support or the access schedule, but it is important to know that these provisions are subject to modification.
6. Division of Assets and Debts
The first step in dividing the assets in a separation agreement is determining what is marital property. Marital property includes anything that was acquired during the marriage. A court will not determine any division of debt. Generally, debt that is in the name of you and your spouse will be debt that you are both jointly and severally liable for. For example, if there was debt on a joint credit card then your credit card company may choose to collect in full from you or your spouse. In a separation agreement, you and your spouse can make an agreement that will handle how the debt is distributed. It is important to keep in mind, however, that your agreement will not affect the rights of your creditors.
Regarding the distribution of marital property, Maryland is an equitable distribution state. There is no automatic 50-50 split of marital property. The court has many factors it will consider in determining how to distribute property. In Maryland the court does not have the power to transfer property from one party to another if both do not retain title to the property. A court may compensate for this by allowing a party to keep the marital property titled in their name and awarding some monetary award to the other party. In a separation agreement you are free to agree to transfer ownership of the property. In the agreement the party will want to determine how they want to divide real property, personal property, vehicles, investment accounts, pensions, retirement accounts, business interest, bank accounts, etc.
7. Alimony and Spousal Support
A couple can agree to an alimony award in a separation agreement. This agreement might include details like the monthly award, the date of payment, the method of payment, and set dates for termination of alimony. In a separation agreement the award of alimony would generally be either rehabilitative or indefinite. Rehabilitative alimony will be temporary to help provide for the payee spouse until they will have the ability to provide for themselves. Indefinite alimony would be continuous alimony until a termination event. The agreement would state termination events leading to the end of alimony payments for the payor spouse. This could look like a death of the payee spouse or payor spouse, a remarriage or cohabitation of the payee spouse, or if the court finds that alimony is no longer equitable. Under Maryland law, alimony is modifiable under a showing of a substantial change in circumstances that justifies a modification. However, if the agreement includes language that the alimony is non-modifiable then the court will not have the ability to modify alimony.
8. Modification and Enforcement
With a signed separation agreement, you have an enforceable contract. If your spouse does not follow the provisions of the contract, you can file an action for breach of contract. If you proceed in a divorce, you can have the Separation Agreement incorporated, but not merged, into the Judgement of Absolute Divorce. What this means then is your agreement has become a part of the Judge’s Order, without losing its nature as a contract. Now your remedies in the event your spouse does not follow the agreement are breach of contract or to file to hold your spouse in contempt. A benefit of a contempt proceeding is that the court can compel behavior, which the court cannot do in a breach of contract action.
9. Mediation and Alternative Dispute Resolution
Mediation and Alternative Dispute Resolution are beneficial in helping couples come to an agreement on the different terms of the separation agreement. Many times, spouses can be far apart on issues like how much of an alimony award should be paid, where any children should go to school if the parents move to separate homes, or how retirement benefits or joint account funds should be distributed. Mediation and Alternative Dispute Resolution allow for the parties to join in an informal, neutral setting to discuss these personal matters. These two methods also provide an opportunity for an exchange of information. This allows the parties to know the big picture of their spouse’s financial situation so they can make an informed decision on what marital assets they would like to keep or waive. This disclosure also helps to protect the validity of the agreement so that no spouse can claim they waived an interest in assets they were not aware of. Mediation is also beneficial because you get the perspective of an experienced third party who can provide insight into how the court would handle your situation.
Conclusion
It is a good idea to either have an attorney draft your separation agreement or review your separation agreement that you and your spouse created, before signing anything to ensure you have a full understanding of your rights under the applicable laws in Maryland. Contact our team today to discuss your rights and get assistance drafting or reviewing a separation agreement!
