What Exactly is a Separation Agreement?
What you will find in this section is a definition of a separation agreement, an explanation of the purpose of the separation agreement, the difference between a separation agreement, a divorce, and other written legal documents and some of the requirements for an enforceable separation agreement in Alabama.
A separation agreement is just an agreement of two people to live separate and apart so as to terminate their marriage. It is a document that simply says, "We are living apart. We want to get divorced, and so we are splitting up our things this way…" It serves as an outline of the parties’ intentions in their negotiations. In some cases, it becomes the contract that leads to their divorce judgment entry. Mostly, though, it becomes the basis for deciding who gets what property in the divorce. This is so unless the parties agree that the family court should decide what to do with the property upon filing for divorce, or the separation agreement is just given as a written document to the family court that issued the divorce judgment entry instead of it becoming part of the court record. Separation agreements are different from divorce judgments entries because they are typically written and signed before the divorce is filed with the family court . That is the point of them — they are contracts between husband and wife to be — and they are sometimes entered into before the divorce case is filed and any divorce judgment entry is obtained. Separation agreements are different from most other legal documents because they are typically written and signed by the parties almost without any guidance, except maybe by their lawyer. If the parties have something that they already know they want their court to decide for them in a divorce and have no interest in going through the separate agreement process, then their separation agreement is really just their divorce judgment entry on a piece of paper with a different name on it. It may look different, and it may be the work of the family court or their lawyers instead of the parties, but in the end, it just serves as their divorce judgment entry. The only requirements for an enforceable separation agreements are: These documents are not divorce judgments. They cannot substitute for a divorce judgment, which requires that a family court approve it, and grant it as the judgment entry. As such, if you have no intention of filing for divorce, then a separation agreement may be just what you want when it comes to ending your marriage.
The Requirements Under Alabama Law
The only requirement for the separation agreement is that the parties execute the same. Unless the parties are represented by separate counsel at the time of executing the marital settlement agreement, the agreement is not binding on the parties and not enforceable in a court of law. Any agreement executed by parties that are not represented by separate and independent legal counsel at the time of its execution is unenforceable as a separation agreement and is probably just an enforceable contract. The agreement does not have to be filed with the court until it becomes part of the final decree of divorce and then the agreement is part of the public records of the court. Once the agreement becomes effective, it will be subject to the laws of contract. This means that a judicial decree or court order would be required to enforce the agreement.
If the parties enter into a pre or post-nuptial agreement, those agreements are not subject to contract law, but the rules dealing with Contracts of Indemnity would apply. This means that the separation agreement is not automatically voided should one or more of the parties’ obligations under the agreement become impossible to perform, or should the parties reconcile before the final agreement is accepted as part of the divorce from the other spouse.
In general, an agreement to be enforceable must be supported by consideration. The threshold is low. There must be an offer, acceptance, consideration by something of value passing; so long as the parties have agreed to these considerations, an enforceable agreement exists.
Advantages of a Separation Agreement
A legally acceptable separation agreement is usually a solid idea for several reasons. From a financial standpoint, it can spell out who owns what, who is responsible for what expenses, and how property or funds will be divided. This kind of agreement is useful in the case of divorce, so that spouses have a clear idea of how to proceed during the divorce process and once the marriage is dissolved. It is also a way for unmarried couples to reach agreement over the division of assets and liabilities. A separation agreement can help protect individuals from having to pay debts or taxes for which they are not legally responsible.
When children are involved, a separation agreement can be a useful tool for determining primary custody, visitation rights, child support and other responsibilities in writing. Because a separation agreement covers who will live where after separation, it can sometimes minimize the loss, even if physical property is being divided. Once it is reached, the spouses do not have to negotiate ever again, so there is one less area of conflict for separated spouses to deal with.
It is a legally binding document, so both spouses need to carefully review it before signing. If either parent fails to adhere to its terms, a court can enforce the agreement as a marital contract, incorporating it into divorce proceedings as necessary.
Five Essential Components
When preparing a separation agreement in Alabama, there are several key components that must be considered. First, the agreement should include a list of all the marital property, along with a plan for how that property will be divided upon divorce. This could include assets such as real estate, bank accounts, vehicles and retirement accounts. The parties should determine which property is separate property and should not be subject to division. Separate property can include gifts received from a third party, property owned by one spouse prior to the marriage and any property specifically outlined in a written agreement or other court order.
Spousal support is another important aspect to address in a separation agreement. A court will look to several factors when determining whether spousal support is necessary, including the age and health of the parties, the length of the marriage, the conduct of the parties, and the parties’ earnings and employment. However, only a court can award spousal support and the parties should be cautious to clearly outline the requirements for spousal support in the event of a court divorce.
If there are children of the marriage, the issue of child custody and child support must also be addressed in the separation agreement. Courts will often look to the best interests of the child when determining child custody and support obligations. The separation agreement should include a plan for custody of the children, timesharing schedule and child support obligations. It is also critical to outline how child support will be calculated and what additional expenses are included in the award of child support, such as health insurance costs, daycare costs and school tuition.
The separation agreement should also include which party is responsible for paying marital debts, such as credit card or mortgage payments during the separation period. It will be important to provide direction to the parties in the event the debts remain unpaid for the duration of the separation period.
When drafting a separation agreement in Alabama, it is most important to address issues specifically related to your family. There is no one-size-fits-all option, and the separation agreement will vary by family. Because the outcome of the separation will depend on all the issues that need to be negotiated and included in your agreement, it is important to properly consider all aspects prior to making your final decision.
How to Prepare a Separation Agreement
You will almost certainly want an attorney’s help in preparing a good separation agreement. Under Alabama law, the parties to the agreement must sign and, before a notary public, acknowledge it in writing. It is therefore important that each party’s signature be witnessed by a notary or other qualified official (Section 30-2-53, Code of Alabama 1975), which a qualified family law attorney can facilitate. The law also requires that you exchange "full and fair financial information," which usually means using your attorneys to help ensure that you are not taken advantage of by your spouse in how you value the assets .
An attorney can help you take inventory of your assets and debts to ensure everything is accounted for. An experienced family law attorney also knows the law governing the equitable distribution of marital property to help ensure you believe the division you have agreed to is fair and reasonable. The attorney can also help you craft an enforceable drafting that provides for spousal support in addition to child support if appropriate, or any other arrangements you need.
Enforceability and Changes Later On
Unlike a divorce decree, a separation agreement does not incorporate the terms of the agreement into an order of court. Therefore, the only way the Separation Agreement will be enforceable if it is reduced to an order of court. This is done by filing a Petition to Enforce with the Court. This may require a hearing to determine whether or not the Separation Agreement is enforceable. This is a question of law and one that may depend on the particular facts and circumstances of each case. Orders of Court incorporating Separation Agreements may also be subject to modification by the Court. This is primarily true regarding child custody agreements. Under Alabama Code 30-3-131, a court may modify a prior judgment, decree, or order relating to child custody when the circumstances of the child or one or both parents have materially changed since the entry of the last decree or custody order involving that child, and the modification is necessary to serve the best interests of the child. The Court is constrained by the language of the statute. As such, the moving party shoulders the burden of demonstrating a material change in circumstances since the last order and that such change warrants a modification of the existing order. Furthermore the Court cannot grant the Petition unless it is clearly shown that the benefit to the child outweighs the inherently disruptive effect that changing custody would have on the child.
Pitfalls to Avoid
There are certain common mistakes that couples make when creating their separation agreement. The first is the failure or ability to create a realistic timeline. People often want the agreement to be prepared, reviewed by them and signed with little to no time for their attorney to obtain documents, thoroughly review the documents and prepare their case for signatures. You have to be realistic about these things. You cannot create the agreement on Thursday and expect it all to be completed on Friday. You must allow yourself adequate time to obtain the information/documents needed to prepare the agreement and adequate time to review the agreement before it is signed. Putting pressure on the attorney creates mistakes and unnecessary delays in obtaining a valid agreement. Ask yourself these questions: What is the date demand is being made for the agreement? How long do you expect the review and feedback from your attorney in order to prepare a formal agreement? What is the time limit for the other spouse to sign the agreement? Will you sign or will your spouse sign first? These are all things to think about and ask your attorney about so there are no mistakes or delays in obtaining the agreement. A good attorney will walk you through this process to avoid any mistakes. It is important that you speak up when your attorney is asking questions about the language of the agreement to be sure you are understanding what is being asked and you are getting the agreement you need.
Another mistake to avoid is not considering how the agreement can have future tax consequences. Take for example the distribution of the marital portion of your retirement. For example, one spouse may have a large 401(k) and the other has a much smaller retirement account. You may want the larger account to be divided into a method that allows each spouse to share the income tax liability in an equitable manner. A Tax Deferred Account can be divided without penalty and without a tax consequence; therefore, it is better to distribute a portion of the larger cost basis account to the smaller cost basis account and doing so in a manner that avoids creating a tax consequence.
Another common mistake is failing to properly value real estate. In Alabama, the property should be valued as of the date of separation. In doing so you should do a preliminary title search to be sure that the date of separation listed on the title is accurate. A prior or later date may affect the value of the home. However, the value of the home should be based upon a reliable third party source such as an appraisal, a BPO or a comparative market analysis. If you are going to keep the home, you should get an appraisal or at least do a comparative market analysis prior to agreeing to purchase the home. If you are going to put the home on the market, it should be listed with a real estate agent and the value of the home will be based on the market in that area at the time the home is to be sold.
When You Should Consult an Attorney
Since entering into a separation agreement can result in the loss of certain rights for you and your spouse, it is important to have legal representation when drafting or reviewing a separation agreement. In fact, in many cases, a judge may not accept a separation agreement unless it has been reviewed by a lawyer. An experienced attorney will inform you of your legal rights, advise you about the benefits and drawbacks of the proposed terms of your agreement, and guide you through all of your options, as well as the divorce process itself .
For example, if your spouse is requesting that you relinquish your rights to certain property or to spousal support, you need to understand the terms of any contractual agreement and its possible short- and long-term effects, before you decide to sign on the dotted line. A properly structured separation agreement can be a key factor in the success of your following divorce. However, if you learn that you will be surrendering more than you anticipated, legal counsel may advise you to try to negotiate new terms with your spouse before signing the agreement.