Equitable Distribution requires contract expertise
When a divorcing couple enters into a property settlement agreement (also known as Equitable Distribution) they are entering into a contract that is enforceable in court under the rules of the Pennsylvania Divorce Code. The eventual Divorce Decree acts as a Court Order that enforces the terms of the property settlement agreement; a breach of that contract would then be a violation of a Court Order, or contempt of court.
For example, if a husband stops paying alimony in violation of the property settlement agreement, the wife could file a simple contempt petition to make the husband answer to a judge rather than having to file a complicated lawsuit to try to compel the husband to keep his contracted promises. This makes enforcement of a divorce agreement much easier, faster, more efficient and much less costly.
Although procedurally a property settlement agreement falls within the divorce law for enforcement purposes, the agreement is treated by law as a civil contract. The divorce lawyer must follow the traditional and strict rules of contract law when drafting a settlement agreement. Ignoring core requirements of contract law could result in "loopholes" and unintended consequences.
One unintended consequence cost a divorced husband $34,000.00 in October of this year.
In their Lehigh County divorce, a couple entered into a property settlement agreement that awarded the wife the money held in several of the husband's investment accounts. Between the time the couple signed the agreement and finalized the divorce, to when the wife actually received the funds, the value of those accounts had risen by $34,000.00.
The husband balked at paying the increased value and the wife took him before the judge for contempt of court. The judge ruled that since the written agreement failed to specify when the value of wife's interest was to be calculated, the wife was entitled to the total value of the investment accounts at the time of the distribution or rollover to the wife.
Basic contract law stresses that vagueness be avoided, and that the terms of an agreement be clear and precise. Too often contracts are voided or interpreted unfavorably due to a lack of specificity. It is likely the husband would have saved $34,000.00 if his lawyer inserted language in the agreement that specified when the value of wife's interest in those accounts would be calculated.
Moreover, as the agreement lacked such specific language, it is likely the wife would have brought the husband to court if the values of the accounts had fallen rather than risen. Ambiguously written contracts invite trouble.
Labels: "Equitable Distribution"

