The Importance of Legal Advice Before Signing a Marital Settlement Agreement
As a Chicago divorce attorney, I get so many questions about whether people need legal representation before signing a marital settlement agreement. What could be more important than dividing up the monies and assets you accumulated during the marriage or securing your pension? When you realize that your marital settlement agreement is drafted in such a way that is not beneficial to you, you are not going to be able to come back to court to fix it. Once you are done, you are stuck with what you agreed to, absent fraud by your ex-spouse. A Marital Settlement Agreement defines your life going forward so yes, please have someone review the document before you sign it!
5 Provisions to Watch Out For Before Signing a Marital Settlement Agreement
How your pension is divided is one very important aspect of the Marital Settlement and it is very easy to get it wrong. Has someone considered the tax penalties? For instance, in a 401(k), if you weren’t counseled about it, you might cash part of your 401(k) and give her the one share she is entitled to without considering the drafting of a QDRO-Qualified Domestic Relations Order (“QDRO”). Having a QDRO prepared would allow you to transfer the ½ share tax-free and then if your ex decided to cash it, she would be responsible for the tax.
Making sure that a simple word like “marital” or “non-marital” defines your pension when it is divided and it could be disastrous if done incorrectly. I recently worked on a case where the court made the error and wrote that the ex-wife was entitled to ½ of our client’s pension and failed to write the word “marital.” Now the ex-wife is trying to obtain ½ of our client’s pension, even the pension accumulated after the divorce. In other words, she is trying to obtain pension monies as he continues to work even though the monies he is putting away after his divorce is clearly his non-marital property. If we had not caught the judge’s mistake, our client would be paying ½ of his pension monies to his ex-wife from the total he made, and not just ½ of the pension he made during the marriage. The same can hold true for failing to account for pension monies earned before you even got married. Simple things, like a word or two that is missing in your marital settlement agreement, can be devasting if not caught before the judgment is entered.
2. Marital Property
Recently, a client came to me and had worked out all the terms of her divorce with her husband. She was going to let him keep the house and she was going to keep her pension. The values seemed in line, so it sounded like she had made a sound decision, except for one thing. My client had signed for a second mortgage on the house and after having done a title search, we found out she was not on title to the home. During her marriage, she had agreed to be responsible for a loan on a home she had no ownership in, which would have resulted in her paying for something she did not own. If her husband had died after the divorce, and he did not leave that house to her in his Will, it would have gone to his heirs, and she would still be stuck paying for the asset even though she did not own it. Again, looking at the language in the document allowed for us to negotiate on her behalf and make sure that her ex-husband refinanced the home to make sure she wasn’t liable for it in the event he did not finish paying off the loan.
3. Spousal Maintenance
What about this maintenance paragraph? Can you see anything wrong with it if you were David?
Because of the marital and other family relationship, David has been voluntarily providing for Amy with approximately 50% of his income since the inception of this case in January 2020 (2 years). Pursuant to the Statutory Calculation for maintenance based on the party’s gross monthly income (Amy of $1,000 and David of $9,500) David agrees to pay to Amy for her maintenance the sum of $2,300.00 per month.”
First of all, maintenance provisions are hard to understand, particularly when you do not know the correct lingo. Is this reviewable maintenance? Permanent maintenance? Rehabilitative maintenance? Does Amy have an obligation to work at all? David has agreed to pay Amy $2,300.00 a month, but there is no termination date. What if Amy remarries? Will David get to terminate his maintenance to her? If the agreement doesn’t state that, he might be able to terminate it upon a motion to the court, but he is taking a chance. He might not be able to. Then what? He would continue to pay Amy even though she has now remarried.
The worst thing for David is that it is now necessary for him to go back into court to have a judge interpret this agreement, when he should have had a family law attorney look at it in the drafting phase. It’s always much cheaper to do it that way, before the divorce judgment is entered, to have a couple of modifications made to the language in that agreement. This would have saved David a lot of headaches as to how long he has to pay Amy and under what scenario the maintenance terminates. I would say that most attorneys do not go looking at ways to purposely hurt the unrepresented litigant, but there are many lawyers out there that will do just that. They know you are unrepresented, and they will take advantage of you. Don’t let them!
4. Division of Debts
Does the agreement state who has to pay off the debt? If the credit card is in your name and the agreement does not say that your husband has to help you pay that off, who do you think will be paying for the whole thing after the divorce? That’s right, it is you. If the provision is left out entirely, you are not going to be able to come back into court to add it later.
5. Division of Bank Accounts
Same problem as above. If the marital settlement agreement does not state that you are dividing the bank accounts, and you have $2,000 in your account and he has $20,000 in his on the day of the divorce, you just lost some money. You are not going to be able to come back later to fight about this. The time to discover assets and money is before the divorce is completed. You have cost yourself a lot of money simply by having an important paragraph omitted from your agreement.
Ready to Sign a Marital Settlement Agreement?
Do not be short-sighted by failing to hire a divorce attorney to review your settlement agreement. It is great that you were able to speak to your spouse and work to resolve your divorce case without hiring lawyers. Or, perhaps you were trying to save money with just one of you retaining an attorney. But, chances are you don’t know what you have lost because you do not know what you are doing. You are ignorant about the law because you have not trained to be a lawyer. Unless you are an experienced divorce lawyer, you have not reviewed thousands of these agreements and litigated post-decree matters.
Don’t risk your future. Hire an experienced family law attorneys if not to negotiate your settlement agreement, then at least to review it so that you can avoid making costly mistakes. If you are working to settle a Chicago divorce, contact us today for a free consultation with one of our divorce attorneys to help you move forward.
THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/blog/importance-of-legal-advice-before-signing-marital-settlement-agreement/