What Constitutes a Marital Separation Agreement?
A marital separation agreement in Maryland is essentially a contract in which a husband and wife agree to live separate and apart. The separation agreement serves as a guideline for both spouses to refer to throughout their time apart.
The ultimate goal of the separation agreement is, of course, divorce. However, during the time between a decision to separate and a decision to divorce, the separation agreement can lay out details such as:
Pensions, retirement accounts, and other financial interests: if the couple involved has divided or agreed to divide their pensions, 401k plans, IRA or other retirement accounts, these terms will be outlined in the agreement. This is an important factor when determining whether to remain separated or go forward in the divorce process .
Living arrangements: spouses who have decided to separate will for a time most often be living apart, whether in the same town or not. The terms of where each spouse lives will be outlined in the separation agreement. For example, a spouse will be living in the family home while the other spouse agrees not to return to the home unless invited by the first spouse.
Child custody and child support: if the couple has children under the age of 18 who need to be provided for, their needs may be included in the separation agreement, including how much the non-custodial parent pays, in addition to how often they are allowed to see the children during a separation. The agreement can also include provisions such as changing the child’s last name or allowing or disallowing the child traveling outside of the country without the consent of the other parent.
Provisions to Consider Including in a Maryland Separation Agreement
The primary purpose of a marital separation agreement is to provide for the orderly disposition of assets, debts, custody and support of the children, and spousal support between the parties.
It must be in sufficient detail, however, to protect the assets so that funds are not spent by either spouse between date of the separation and either a Marital Separation Agreement is signed or a divorce is granted.
It should also include provisions which give the right to either party to request a divorce. Some separation agreements contain a "sunset clause" which provides that the agreement shall become null and void six months from the date of its execution, or sixty days after the request for a divorce is filed and not heard.
The crucial issues in drafting or signing a separation agreement are:
- (1) Which party will live in the marital home, and under what terms and conditions, i.e., buy out the other party by payment of money, refinance the current mortgage loan, pay the expenses of the home, assume the debt on the property. If the parties wish to sell the home at a later date, a provision should be included to establish a time limit for sale and the manner in which it will be sold.
- (2) How to handle the personal property, i.e., jewelry, family heirlooms, antiques, art work, collectible cars, special interests.
- (3) Provisions dealing with retirement benefits of either party. This is especially important if the parties have been married for a long period of time, and/or one party is significantly older than the other.
- (4) Health care issues including payment of medical, dental and hospital expenses, who is carrying health insurance if the family is covered, filing of insurance claims if there becomes a problem with payment of those expenses.
- (5) Who will provide life insurance, and under what terms; when does that obligation terminate.
- (6) Provisions dealing with college education expenses for the children; how much, when, where, etc.
- (7) Provisions that either party cannot interfere with the relationship enjoyed by the other party and the children, and vice versa. It is very important to establish a clear definition of "parental alienation." Also visiting rights, pick up and drop off schedule for the children. Lastly, consideration should be given to who will pay for childcare and costs of transportation to and from daycare.
- (8) Use of a particular motor vehicle, and how long will it be used.
- (9) Bank accounts: savings and whether the money can be transferred without agreement of both spouse or the court and whether a portion of the funds should be set aside as retainer for a lawyer.
- (10) The inclusion of a jurisdiction section should state the agreement shall be construed and enforced according to the laws of the State of Maryland.
- (11) Notary section must comply with the current statutory requirements.
- (12) Although the parties are not required by Maryland law to acknowledge and affirm their obligations under a separation agreement, this procedure will act as an effective admissions procedure if the matter should result in litigation where there is a claim by one party against the other for a breach of contract. In the event of litigation and serve is made on either spouse, if possible the separation agreement should be attached to the complaint or response.
- (13) When complete and signed by both parties, the separation agreement should be executed in duplicate, and once signed, each party should keep an original signed copy for future reference.
Requirements for Enforceability
There are certain legal criteria that a Marital Separation Agreement must meet to be enforceable under Maryland law. The Court has ruled that unless there is an allegation of fraud or overreaching all Marital Separation Agreements are presumed to be fair and valid. Except in fraud or overreaching, the court will not substitute its judgment for that of the parties. To be enforceable, a Marital Separation Agreement must be signed by both parties and must be notarized. In Hendrick v. Hendrick, the Court held that the marital separation agreement, in which husband waived his right to equitable distribution, was not valid when it was not signed by both parties. While the Court suggested that a court might accept a non-notarized agreement pursuant to MD Fam. L. Code Ann. ยง 8-101(f), which stated that a property interest in an agreement signed by both parties is enforceable, the Court held that there was no evidence to suggest that the wife was aware of that section. If a lawyer is going to draft a separation agreement, make sure he or she includes the language set forth above, which also grants the trial court with the subject matter jurisdiction to divide marital property.
Role of Mediation and Attorneys
While it is possible to create a marital separation agreement without the assistance of any neutral third parties, the process is much smoother and less likely to result in any remorse or regret if both parties take the time to work their way through the various issues contained in the agreement with a qualified neutral mediator. A mediator does not represent either party to the separation agreement, but rather serves as a neutral to facilitate discussions about the divorce. No matter if you mediate with a mental health professional or a legal professional, it is generally inadvisable to attempt to draft the agreement on your own without the assistance of a neutral third party. When working with a mediator who specializes in family law, you will be allowed to vent your frustrations about the divorce; however, they will remain neutral the entire time. While you may be unsure about how to draft certain clauses within the separation agreement, a mediator will be able to explain to you exactly what options you have and help you decide which ones are best for you and your family. For both of the sample agreements we provided above, a lawyer wrote these documents. Even for those people who are really good at writing and negotiating, a lawyer is not only trained to draft these agreements, but also is emotionally detached from the family and will be able to provide you with an outside perspective that can be extremely valuable. Most importantly, however, before entering into any kind of separation agreement, it is important to have your own attorney review the document. While people do sign separation agreements and divorces occur without hiring a lawyer, these people should be well aware of what they are getting themselves into.
Amending a Separation Agreement
Maryland law allows for the modification or adjustment of a marital separation agreement but under only specific circumstances. For example, if the terms of the agreement do not include provisions that are fair and reasonable then the separation agreement may be modified. Separation agreements must include full and complete disclosure regarding all income and assets so that an equitable division of property can be achieved. In order to modify the terms of a marital separation agreement it must be found that either there was fraud or misrepresentation at the time that the agreement was made or a material mistake was made. It is also important to recognize that the only terms of a separation agreement that qualify for modification are those related to support, alimony and child support.
Maryland courts can and do uphold agreements if they are entered into fairly and because a separation agreement is a binding contract. However, if the terms and conditions within an agreement are no longer relevant due to a permanent change in circumstance then a party may seek to have the agreement modified by the court. A party may also seek to have support payments increased or decreased regardless of whether or not there is a valid separation agreement if there has been a significant and permanent change in circumstance . When separation agreements are created a sufficient level of detail should be included so that the specifics are known and understood. Some of the details that should be agreed upon include the duration of child support and who will be responsible for medical and dental costs that are uninsured. Some of the other elements that should be stated in the agreement include how custodial interference will be handled, how travel with the children will be addressed and where each party will live if there are multiple properties involved in the agreement. While the agreement may not cover every issue that may occur over many years, some of the items that should be addressed in the agreement may help with the unforeseen details as they arise. For instance, the agreement may stipulate that certain items need to be addressed in mediation before a set date. If mediation has occurred the parties may be obligated to go to trial if themselves and their respective attorneys can not come to a suitable agreement during the mediation process. A temporary separation agreement is often created while the divorce proceedings are going on.
Separation Agreement Versus Divorce
Unlike a divorce, where a marriage is legally terminated, a marital separation agreement is an entirely voluntary legal contract. By the terms of your separation agreement, you and your spouse can choose to live apart while at the same time make legal commitments to each other about sharing joint assets and resolving issues for advantages to both parties. Just as with a divorce, you should work with an experienced lawyer to ensure that the terms of the contract do not put you in a worse financial situation than you are today.
A separation agreement in the process of changing into a divorce in Maryland. During this transition, the terms of the separation agreement remain in effect until a divorce is obtained. Also, by the terms of a separation agreement, you can decide to settle for more or less support from your spouse as you await a divorce that legally ends your marriage. And as long as both spouses agree, you have considerable flexibility in negotiating the terms of your separation agreement, even when those terms seem unreasonable for divorce purposes.
Pitfalls to Avoid
One critical mistake is failing to fully disclose assets and liabilities. Every party to a marital separation agreement must provide a complete and accurate financial disclosure statement, usually in the form of a balance sheet that lists assets and debts. Attempting to conceal an asset can have serious consequences, both in the separation agreement itself and in any future divorce proceedings. As such, parties should be completely honest in their disclosures and make sure to account for all assets, even those that require some work to value.
Another common pitfall involves not including provisions for tax considerations. The language in a given divorce decree can impose tax consequences that linger for years. For example, you’ll want to evaluate whether it makes sense to designate yourself as the "owner" of a vehicle based on titling requirements. You’ll also want to decide whether it makes more sense to specify that an asset should be appraised and divided as of the date of divorce, or some other date in order to account for subsequent appreciation during the pendency of the case. Some couples could realize substantial gains from a particular investment. The tax implications of waiting to divide those assets until a later date might outweigh the potential for depleting the principal if the funds are invested. Most importantly, all titles should be transferred and any accounts that need to be emptied should be closed.
Another mistake is not finalizing the agreement before the court grants a divorce. Even though the court will approve the agreement before incorporating it into a divorce decree, the court technically only has the authority to enforce an agreement in writing, signed and acknowledged by the parties. Additionally, even if an agreement is incorporated into a divorce decree, some issues may not receive the full protection of the court’s continuing jurisdiction, depending on when the agreement was made. If there is a possibility of a further reconciliation after the separation agreement is signed and approved, however, this is not the same as the separation itself being "unofficial" and should not deter a couple from formalizing the agreement to protect each spouse’s interests.
It’s also worth avoiding the urge to sign an agreement just to see it taken before a judge for approval. In Maryland, you cannot enforce an agreement in writing against your spouse without some external evidence establishing assent to the agreement, such as a recorded or transcribed audio or video recording of the assent. Though making the agreement binding on a non-signing third party such as the court might seem to make it irrelevant to enforceability against your spouse, the absence of the recording is fatal to your enforcement efforts against your spouse.
A similar risk of non-enforceability would occur if one spouse were to die immediately after signing the agreement. To avoid this, you may want to cite the date of signing as the effective date of the agreement. Since they will have a copy of the executed agreement, spouses may also avoid some interpretative ambiguity by preparing, recording and entering into a property settlement or other postnuptial agreement at the same time they execute the separation agreement.
Steps to Take When Preparing a Separation Agreement
In Maryland, the parties to the marriage are free to work out the terms of their marital separation. The important concepts to remember are that the agreement should be clear on its face, that it is temporary, that it is not contingent upon the occurrence of some event, and that it is fair. By way of example, if the husband is giving up a piece of real property, it is not fair for him to have to pay 100% of the mortgage payments on that property while the wife receives 50% of the rental income. In other words, the parties need to bargain in good faith during the process of drawing up the terms of their agreement.
With the retention of the attorney to assist in the preparation of the separation agreement, the lawyer will usually have the parties meet with him or her at least at the outset, discuss with both parties what the law says concerning their rights and responsibilities, and then ask the client to have in mind what he or she feels they want out of the pending separation. The lawyer may then prepare a draft of what he or she believes to be a fair and equitable agreement, and submit that to the other party, preferably through his or her attorney . Negotiations will then take place until a settlement is reached as to each of the various terms of the agreement. Many agreements will have a form of attachment including a statement of understanding at the end of the document which is signed by the husband and wife. This attachment can have references to the various terms contained hereafter as the attachment is drafted in the manner of a modern-day contract.
The issues that should be addressed in the agreement usually are: separation, grounds, and disposition of property. The terms of the agreement should state specifically that the parties are living apart, that neither of them has used their physical presence to frighten or coerce the other, and the husband and wife no longer physically live or sleep in the same bedroom on a regular basis. As to the grounds, the parties usually agree to state that the marriage is irretrievably broken, but it should also provide that the husband and wife have been living separate, apart from one another without cohabitation since a certain date in the past (the date which they actually separated).