Divorce and Contracts: What You Need to Know about Settlement Agreements

It probably seems odd to think contract law plays into your divorce case.  If you determine to settle your case, it does and will play a part.  It is very important to understand the power of a contract.  The fact you are reading this blog makes the point. You would not have internet or phone service now to read this blog without entering some contract for services, nor would you have light and electricity to power your computer or charge your device. Most of the time, it does not matter that you, your life, and your world only exist as you know and understand to be the case because of a series of contracts governing everything you do, see, can envision, or dream about.  

That said, consider this:  There was be no gas at the gas station to fill your car if your gas station did not have a contract to get gas to sell to you (or you would not have power to charge your car at a supercharger if there was not a contract somewhere for electricity) from its supplier.  This noted, any type of written and signed settlement agreement in your divorce case is a contract.  This blog covers what you need to know about settlement agreements (or mediated agreement, which is a form of settlement agreement) in your divorce case.

There at two key components to all settlement agreements on all issues in a case with divorcing spouses where there are children:  property division and physical and legal custody and parenting time under the Indiana Parenting Time Guidelines.   The reach such an agreement, it is important to understand the key legal standards of both components.  As it relates to a property division, if you went to trial the court would follow the controlling statues in the Divorce Act.  In doing so, it would presume an equal division of the martial estate is just and reasonable.   With children, the court always determine physical custody by considering all of the evidence and deciding this by sorting out what arrangement is in the best interests of the children.  Do you have to consider these legal dictates in reaching a written settlement?  It depends. 

With property, it is important to understand that property is all property brought into the marriage by either party or acquired by the parties during the marriage up to the date of filing. It does not matter whose name the property is titled in, as Indiana is not a title theory state.  Furthermore, property inherently includes all debts of the parties up to the date of filing.  With this, it is important to note that the right to contract is found in the contract clause of the United States and Indiana constitutions.  

In a property division between the parties, it is entirely permissible for the parties to agree to and then enter a contract the divorce court could not order in its division. For instance, a party could agree to an unequal division for any number of reasons a trial court judge could not consider or no reason at all (other than to be able to divorce and move on with life).  This is because of the strong and clear constitutional right to contract.  The parties could agree to relief a divorce court could not enter upon receiving the evidence, such as rehabilitation maintenance for five years.   Rehabilitation maintenance is to provide a spouse the ability to acquire sufficient training and education to find appropriate employment.  

There are many novel (but serious to any given pair of litigants) types of agreements the parties could enter into, such as elaborate pet visitation provisions.  The trial court cannot do so as a pet or pets are property the trial court has to award to one party or the other.  Finally, other contracts sometimes come up in divorce litigation that are important to note.  If it exists, a prenuptial or post-nuptial contract, may by operation of law prohibit a settlement outside the terms of that contract.  

Also, the settlement of any divorce by agreement cannot impair the contract rights of any third party. For instance, a divorce court judge cannot order a bank to remove the spouse from the mortgage who is not getting this martial residence by the settlement agreement.  This third party is not a party to the litigation. In this case, while the parties may agree that one person is removed from the mortgage, this would have to occur by refinancing the mortgage, which may not be possible if the borrower has too low of an income to qualify for a mortgage.

With physical custody, the parties’ agreement to any custody arrangement is always subject to the review and approval of this agreement, which again is a contract, by the judge.  This is because the judge, and the judge alone, always must consider a proposed agreement and what is in the children’s best interests.  Agreements of all types are favored by the law governing family law generally. So, any given judge is likely to assume the recitations set out in the filings before the court and any agreement sent to it to review and approve is in the children’s best interests; why else would parents so agree?   

This noted, it is foreseeable that a judge would give special scrutiny to any agreement where the record before it indicated DCS involvement, drug use, or pending charge or recent conviction of a party.  A judge likely would be reluctant to approve any settlement agreement where the parents divide up the children between them.  Finally, given specific direction by the Indiana Court of Appeals, a trial court judge is unlikely to approve any agreement on the corollary topic of child support that appears to use an arbitrary number for weekly support and does not contain a child support worksheet.  

Ciyou & Associates, P.C. are involved in all aspect of divorces and paternity cases across the state, as well as interstate custody jurisdiction matters, such are “home-state” litigation under the Uniform Child Custody Jurisdiction Act, and international child abduction under relevant state and federal laws, the Hague Convention on the Civil Aspect of Child Abduction. The take-away from this blog is you should educate yourself about to a general understanding of the laws impacting your case so you can better understand what you face, know what you do not know, and be comfortable in relying on your attorney in any given domestic matter.  As this blog demonstrates, even a simple agreement on property and/or custody is not “simple”.  The Firm routinely handles domestic cases across the state of Indiana.

This blog is written by the trial attorneys at Ciyou & Associates, P.C.  It is not intended to provide legal advice or be a solicitation for services. 


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