ExExpense - Expense Management: +Why are Remedies missing from most Marital Separation Agreements?

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Why are Remedies missing from most Marital Separation Agreements?

The divorce is final when both parties sign the Marital Separation Agreement (“MSA”), and often that requires a judge to question both parties about the agreement, asking to make sure that you sign the agreement without undue influence and of their own free will. Many of these agreements are not like regular agreements that the rest of the world uses.

Commonly, agreements spell out the duties of both parties and the consequences for either party to fail to perform the duties under the contract. But in MSA’s often there is no consequence to the failure of one of the parties to perform the specified duties, other than to hire an attorney and go back to court. For example, there may be a stipulation in the agreement that child support would be adjusted based on the actual incomes of the parties at a certain time. And the agreements often add in “if the parties cannot agree, either one can file a motion with the court.” Wait a minute, you both agree to a calculation based on a formula using the tax return numbers and if one party doesn’t like the outcome from the calculation, instead of trying to understand it, they can just force the other party to spend money and time and file a motion and go to court to have the judge explain it to them. There is usually never any penalty for this obstruction type of behavior.

Examples of Rental Agreement as Comparison

As an example, let’s compare this with another type of agreement. In a rental agreement, one party agrees to pay another party rent and as long as that rent is paid by the 5th of each month, it will remain fixed. But if the rent is paid after the 5th day of the month, there is a $50 penalty. This discourages the late payment. You will not find this type of penalty clause in an MSA. This makes no sense to me. Because if you include penalties for lack of compliance you encourage compliance.

Medical Expense Sharing Example

In one case that I’m familiar with, the parents were required to share in the medical bills and other specific expenses of the children. The mother refused to reimburse the father for any of the expenses he incurred. After a couple of years she owed him over $7,500 and he was forced to file a motion to try to get the money back. All the while, she was receiving timely child support and alimony payments from him. In my opinion, this seemed like a mathematical calculation and not really subject to interpretation, but the judge forced the couple to go to mediation to resolve the expenses reimbursement issue. The weird part about this was that the mediator recommended that the father accept $500 instead of the $7,500 that he was owed. The mediator’s explanation was that it would take so much time and cost so much money to go to court to collect and it was not worth it. The mediator was asked about the agreement, and he simply said that the agreement was a starting point for negotiation. He was also asked if the amounts paid for alimony and child support can be offset against the medical expenses and the answer was No! Again, without any reasonable explanation.

Why not add consequences to parties that fail to comply with the MSA

It wouldn’t be inappropriate if the MSA stated that if one party refused to reimburse the other for unreimbursed medical expenses of the children, then other financial or nonfinancial penalties kick in. Financial could include termination or adjustment of alimony and non-financial could be adjustments of child visitation rights. I guarantee that with such punitive clauses, the party in default would not miss any reimbursements, because of the possibility of losing other benefits provided in the agreement as a result of this noncompliance.

The absence of penalties and consequences and remedies and MSA’s make it easy for one party to take advantage of the other and rely on a subjective interpretation by a judge and require both parties to waste money on additional attorneys on things that could have been avoided if the agreement was written correctly in the first place. For example, if a parent would lose alimony if they were not upholding their obligations under the agreement and the agreement specifically stated it, it would be extremely difficult to overrule an agreement defined in detail and signed to by both of the parties. But in the absence of specific remedies for failure to comply to the agreement, the judge would find it extremely difficult to punish one of the parties arbitrarily.

Lesson: For every duty and obligation in the MSA make sure to include the consequences and remedies if the parties fail to perform these duties or obligations. Remember to tie in all the requirements in the agreement so the judge cannot strike any single item in the agreement.

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