When a couple is divorcing, it can be an advantage for them to reach an agreement about money, property, and other issues between them. They can sign a Marital Settlement Agreement which spells out the resolution of these issues. Rather than fighting in court about these matters, the judge will look at the terms of the agreement, and decide if they are fair. If the judge approves, then the agreement takes effect.
But before you agree, be sure you know what you are getting into. Some Marital Settlement Agreements can have effects lasting far into the future. What may seem to make sense under your current financial and lifestyle circumstances, may feel quite different a decade later. If you want the terms to have some flexibility to change with your changed situation, then do not lock yourself in to an agreement that cannot modified.
In a recent case decided in an Illinois family court, a husband was likely wishing he knew then what he knows now. He and his former wife signed a Marital Settlement Agreement, where he promised to pay her a fixed amount every month for maintenance (alimony), and other payments, unless or until either of their deaths or the wife remarries or cohabitates. The Agreement said that the payments could not be modified even by a judge, unless both of them agreed to the change.
The problem was, though, that 10 years later the husband’s financial situation was not at all what it had been when he was signing that agreement. He claimed that to continue the same payments would mean that he had to liquidate his assets, and would be unable to support himself. The husband tried to argue to the judge that the agreement was unfair and should be modified.
Unfortunately for the husband, once he signed the Marital Settlement Agreement which said a judge could not modify the maintenance terms, he was stuck with them. The fairness determination was made at the time the agreement was entered in the divorce, and the fact that it might be unfair under his current conditions could not be considered.
He locked himself into paying a fixed amount of money each month, rather than a percentage of whatever his current income would be. And he locked himself into the amount being virtually unchangeable.
Sometimes locking in the terms for maintenance could be an advantage. If his finances had changed for the better, he would not be required to pay more. The uncertainty of being brought into court to reopen the payment amounts is erased. But the downside is that where circumstances make the old arrangement an impossible fit for the present financial situation, you could be stuck.