There are certain grounds under which a compromise and property settlement agreement (PSA) can become invalidated. Usually, when a contract fails to establish certain elements such as an offer, acceptance and consideration, it can be invalidated.
Similarly, a PSA can be invalidated due to:
- Fraud;
- Nondisclosure as fraud;
- Duress;
- Illegality;
- Mistake;
- Undue influence.
Keep in mind that a compromise induced by fraud can be invalidated. In approving a proposed PSA, a court must conclude that the agreement is not the outcome of fraud.
Fraud exists if all of the following elements apply:
- An untrue representation of fact knowingly made by a party;
- Making such representation recklessly and;
- Making untrue representation to deceive the other party and to induce him/her to act upon the same.
Similarly, an unintentional nondisclosure without an intention to deceive will not amount to fraud. But, a compromise can be invalidated for fraud if one party knowingly conceals facts with the intent to induce the action of another party. This duty of disclosure is more comprehensive than other fiduciary relationships. At the same time, it cannot be assumed that the elements of fraud exist only because of the existence of a fiduciary relationship.
When a person creates a compromise as a result of duress, it is invalidated. Duress is typically the imposition, oppression, undue influence or the taking advantage of the stress by depriving them to exercise his or her free will.
Generally courts require that the party asserting duress must prove the allegation by clear and convincing evidence. It is important to prove coercion, fraud or duress by clear and convincing evidence in order to set aside the agreement or invalidate it. Additionally, the burden of proving duress, by clear and convincing evidence, is on the person asserting it. Another factor that blocks a settlement agreement is undue influence.
Usually, undue influence comprises of the following elements:
- A person subject to influence;
- An opportunity to exert undue influence;
- A disposition to exert undue influence and;
- A result indicating undue influence.
What is A Property Settlement Agreement?
According to the Legal Dictionary, PSA can arise through agreement of the parties, subject to approval by the court, or by court order. Once approved, the settlement acts like a contract for enforcement or modification purposes.
Some states use various other terms to describe a property settlement, such as property agreement, settlement agreement, or separation agreement. A property settlement involves the property that the couple obtained either before marriage or during marriage. The agreement can also include such issues as maintenance or alimony payments to one spouse or even custody of the children.
The Uniform Marriage and Divorce Act (UMDA), which has been adopted in eight states, outlines a framework for spouses and courts on what to consider when distributing property. The UMDA has two provisions that deal specifically with the distribution of the couple’s property. One adaptation is that the property should be fairly divided between the parties without regard to “marital misconduct.”
It lists factors to determine when apportioning the property, such as the duration of the marriage, prior marriage of either party, and other factors. The court will also consider the contribution each spouse makes to the family. The specific facts of each case must be examined to reach a fair and just division of property.
How Do Separation Agreements Apply to Non-Married Couples?
While marital settlement agreements are generally prepared for married couples intending to divorce, similar agreements can be drafted for non-married couples with children or significant joint assets, such as financial accounts or property, when they want to separate. Such agreements are usually negotiated, enforced, and revoked using the same methods invoked for marital settlement agreements.
However, a separation agreement dealing with the division of property executed by a non-married couple is not filed with the court but is instead maintained by the parties as an enforceable contract. Seeking professional advice on how to draft these agreements will be useful in including the right information for its validity by each state.
For instance in Virginia, a PSA is a contract between a married couple that sets out the terms of how they will move forward in their lives, both during their separation and after divorce. A signed PSA will be the biggest part of your divorce. The PSA will be filed at the courthouse, along with all of your other divorce documents when your case is ready for divorce meaning that the couple have met the required amount of time of living apart.
What are the Main Components of a Property Settlement Agreement?
There are several components to the PSA which include but not limited to child support, spousal support, property distribution, and others mentioned below. Child support is one section of your PSA that specifies both the presumed statutory guideline monthly award and the actual child support amount to be paid which may differ, somewhat, from the presumed guideline amount. This section also details how certain child-related expenses, over and above the monthly child support award, will be covered.
For instance, it may include out-of-pocket medical expenses, extracurricular activities, work-related childcare, camps, tutoring and private school. Some parties also choose to set forth how college tuition and related expenses will be shared between the parties once the child support obligation commences.
Furthermore, spousal support, also known as alimony, is included in the PSA. This section of your PSA determines the dollar amount of spousal support to be paid and the duration during which it must be paid. Though the law does not clarify, in terms of “how much” or “how long”, there is a list of criteria that judges must consider in an alimony case. This section also sets rules about whether or not spousal support will be modifiable or non-modifiable and, in many cases, the specifics of that modifiability. This section also decides when necessary, waivers of the right to ever petition a court for spousal support at the time of signing a PSA.
Additionally, the property and debt distribution of your PSA provides the framework for the division and distribution of all marital property. In a divorce, the term “property” refers to all assets: real estate, automobiles, bank accounts, investment accounts, stocks & bonds, businesses, antiques & collectibles, furniture, artwork, tools, etc.
This section also clarifies all property that has been determined by the parties to be separate. For example, in Virginia, separate property is not divisible by the court, but the parties are allowed to choose otherwise. This section also decides on how the parties’ debts will be handled during separation and post-divorce.
Other Key Components of a PSA in Virginia and other states may consist of other crucial important information, such as:
- Date of Separation- The date on which the parties agree to begin living “separate and apart” when they move out of the marital residence;
- No-Fault Divorce – A clause that prohibits either party to ever proceed with a divorce on fault grounds ;
- Waiver of Right to Discovery- A clarification if applicable that the parties waived their right to discovery and;
- Taxes – a predetermination of how certain tax benefits and burdens will be divided between the parties.
When Do I Need To Contact a Lawyer?
If you are drafting a PSA or in the process of completing one. It may be important to reach out to a local family lawyer to learn about your rights and responsibilities for signing this document.
