What is a Separation Agreement?
A Separation Agreement is a contract for couples who are no longer together. It outlines the terms on which you and your partner will live apart and addresses how your property will be divided and how you’ll deal with other issues now and in the future, such as child support, spousal support, parenting and others. Its terms may also address issues relating to a division of debts and other assets, spousal support, and other issues you agree upon . It is not a divorce settlement, as it only represents a conclusion of the relationship while the two parties remain married.
In the US, a divorce splits from assets earned during the marriage, whereas a Separation Agreement leaves the marriage intact and divides the assets only in the period of separation. If one spouse wants a divorce at a later date, then the Separation Agreement is used as a road map for how to continue the division of assets and liabilities that both spouses had already agreed upon.
Essential Provisions of a Separation Agreement
The key elements of a separation agreement for unmarried couples are similar to the requirements for separating couples in a marriage, but there are some differences. Child support, division of property and assets, debt division, child custody and visitation, health care coverage, spousal support, and property waste are all important elements to consider. When negotiating a separation agreement, never go it alone. Unlike divorce, which ends a marriage, a separation agreement divides assets and debts and sets out the specific obligations of each party. The separation agreement becomes a legally binding contract after both parties sign it.
The first step in talking about a separation is learning the laws that may apply to your situation.
Division of Property and Assets: A separating couple must agree on how to divide their property and assets. This means everything you own and everything you owe. If you don’t agree, a judge will divide your property according to what is fair, not what you prefer.
Debt Division: All debt incurred during the relationship, as well as debt brought into the relationship must be divided through negotiation. Even if the debt is in one person’s name only, the court will consider how the debt was used to determine if the debt should be split. If funds were used for personal expenses, then the person who used or benefited from the funds should be responsible for the debt. In short, the key principle is fairness.
Child Custody and Visitation: While visitation and residence require agreement by both parties, the court will give primary consideration to the best interest of the child. Factors to be taken into account may include the child’s relationship with the parents, siblings, school, and friends. However, some judges still operate under the established the so called "tender years doctrine," which is the view that very young children are better off with their mothers full time.
Health Care Coverage: If you have health insurance coverage, most likely it can be extended to your child, spouse or partner. Equally, your child or partner may be covered by a general health care program through a community or state service.
Spousal Support: If your income is less than your spouse, there may be a case for spousal support. Spousal support is meant to equalize the incomes of the separating partners. Courts consider the length of the relationship, the current and former financial situation of both partners, the relevant property issues and the tax implications of the amount of spousal support.
Property Waste: Property waste occurs when one partner squanders money, like bet it, spends it on drugs or liquor or goes on a spending spree before a separation or after filing for a divorce. Property waste can be the determining factor in splitting property at the time of separation.
Legal Relevance and Enforceability
A separation agreement between unmarried cohabitating partners may be legally valid and enforceable depending on the parties’ intentions at the time of entering the agreement. Courts in California, Florida, New Jersey, New York, and Texas have each held that a written agreement signed by both parties evidencing the division of property is enforceable. Courts in Alaska, Georgia, Illinois, North Dakota, Ohio, Pennsylvania, Washington and Wisconsin have also upheld separation agreements between unmarried partners based on a written agreement, but only if the agreement addresses support. In contrast, courts in Louisiana and New Hampshire refuse to recognize nonmarital separation agreements altogether. Courts in most other states have not ruled on the enforceability of these agreements, though several allow them if they are required by law to be made in writing and signed by the parties. While the majority view allows for enforceability of unmarried cohabitating partner agreements only if their subject matter is limited to real property and support, it is unclear whether this type of agreement, if meant to be enforced in all situations, should be signed. Whether an agreement will be construed as a contract to live together or as a tool to divide and distribute property depends on the language in the agreement.
Although the law of contracts governs separation agreements, the type of written agreement most likely to be enforced is one that divides the distribution of property upon separation, because agreements that pertain to the division and distribution of real property are governed by the Statute of Frauds. If the oral or implied agreement would be subject to the Statute of Frauds then the agreement must be in writing to be valid. Agreements pertaining to financial support or divorce matters between spouses are governed by the Uniform Premarital Agreement Act. However, courts have held that married spouses cannot enter into marital agreements (including separation agreements) before marriage as a means of organizing their rights and obligations in the event of divorce.
Similar to a prenuptial agreement, separation agreements are enforceable if they are signed by the parties. A court may uphold a separation agreement even if a party is deceived by the other party if it is clear that the court will not be able to make a determination on the parties’ intent. When signing an agreement, where important concerns involves the division of real property, a party may have witnesses sign the document, as well as a notary public.
Creating a Separation Agreement in 10 Easy Steps
Should you choose to enter into a separation agreement with your paramour or significant other, the following is a checklist of items which should be considered in its preparation:
1. Identify and include in the agreement each party’s name. It is equally important to identify all initials and nicknames of each person. The agreement should identify each person throughout the agreement in the same manner.
2. Identify whether the parties have children together. Identify the current custodial and residential arrangement for the children. Should the parties have accrued child support payments, those amounts should be included in the agreement. Additionally, the agreement should set forth the manner in which the parties are to share custody and support of the children moving forward. Specifically, the agreement should set forth a detailed parenting plan which identifies the following:
a. the manner in which the parties are required to communicate and exchange information concerning the children;
b. holiday and vacation schedules with the children;
c. child support calculations (USCS Guidelines) and if applicable, any medical expenses and responsibilities for medical insurance coverage;
d. how the parties’ assets are to be divided including any retirement accounts, bank accounts, and any real estate the parties may own. The agreement should set forth which party gets to keep all or a portion of any bank or retirement accounts; and
e. what happens if one person were to pass away before the agreement is finalized (who is to retain custody of the children, what is to happen to the parties’ assets, etc.?).
3. After the above provisions are set forth in the agreement, each party should place their initials next to each page of the agreement and any attachments. The signature line of the agreement should be signed in the presence of a notary public.
Negotiating Separation Agreement Provisions with Your Partner
Negotiating a separation agreement can be a complicated process; however, as can be seen from the other issues we have discussed, it is not impossible. In some cases parties can come to an agreement on their own without the involvement of lawyers or accountability officers. Again, this approach is not for everyone and usually people find it helpful to have the advice of a legal professional just so they know what they are to expect. They also need to feel confident enough in their own knowledge to be able to insist on points that they feel strongly about. In order to be able to negotiate a separation agreement and have it stick the parties must be able to deal with each other on a non emotional and non confrontational basis. This sounds simple but it is a fact that a lot of people have a hard time doing. It is important that the parties try to approach an agreement in a business-like fashion. This is not to say that any discussion can be devoid of any emotional content. Of course the parties should be able to express their feelings if they choose, yet at the same time they must keep their feelings at check, to the extent possible and exercise good judgment in steering clear of the personal attacks and blame game which often accompany a marital breakup. Once it is determined that the parties can negotiate an agreement without lawyers present, either by making an appointment for themselves, or by getting together in some neutral place, perhaps with a third party to keep the peace, or alternatively, a marriage counselor specializing in family law, the parties will have to "put their cards on the table" and supply each other with all their financial information . Once this has been done, the negotiations can begin. It is extremely important to remain detached from the feelings and to listen to what the other person has to say. They may be more reasonable than one originally thought. In turn, the other person must do the same in listening to what the other person has to say. It is often helpful to take a break if things begin to get heated. The person or persons are then free to take as much time as they wish to think about the agreement points. When both parties feel they have adequately considered the proposals an agreement can be signed or put into writing as soon as possible. Some parties will need more than this. They may feel so contradictory that even with a third party it will not work. In such a situation parties will often agree to go to a mediation to try to resolve the issues they are confronting, so mediators can be called in to help them sort out the points of agreement and disagreement. A mediator is a lawyer who concentrates his or her practice in family law and who has obtained special qualification in this area. In addition there are people who go through a special government training program who are known as accountability officers. A mediator or an accountability officer will interview the parties and make suggestions as to agreements and try to bring them around to some common ground. They have had considerable success in this way. It is a process and can take time but very often, if the parties are able to do it, it is worth it because as much as you are able to negotiate, you will not be sorry.
When to Consult an Attorney
When do you really need to seek legal advice to create a separation agreement?
When both partners are amicable (or at least civil) and on the same page about money and assets, premade templates might just be all that you need to create a comprehensive separation agreement. But if there’s any disagreement, and especially when there are children involved, we highly recommend hiring a family lawyer experienced either in drafting separation agreements, or one who can refer you to one. It’s just common sense that an experienced family lawyer can point out things you may have never thought of, and problems that might arise after you’ve signed the dotted line. Look at it this way: you wouldn’t take the car that you plan to keep for five years to your brother-in-law to be serviced because he knows how to change the oil. Right? Likewise, do it right the first time, so you can sleep easy. After all, you don’t know what you don’t know – but a qualified family law specialist does.
Common Pitfalls to Avoid
When unmarried couples separate, often the agreement made at that point must be respected and cannot be changed later. So, it is extremely important to get it right the first time and avoid common mistakes that occur with married couples when they separate.
One such mistake is failing to consider spousal support payments or failing to deal with the issue of spousal support. Because parties are not legally married in an unmarried couple’s context, there is no automatic entitlement to spousal support. However, a spouse may be entitled to spousal support if they have a "need" and the other party has the ability to pay. It is not uncommon for common law couples to go through the separation process and draft or sign a separation agreement without addressing the issue of spousal support. This can certainly lead to complications down the road. The problem is particularly prevalent is situations were there is a significant disparity between the incomes of the separating parties.
Another mistake is inadequately dealing with property rights. While there is a presumption that married couples will divide their assets equally, the law is less rigorous in this area for common law spouses. If a party wishes to claim an unequal division of assets or their rights against a common law spouse following the breakdown of a relationship, they bear the onus of establishing that it would be "unconscionable" for the parties to retain their respective assets in their entirety. To ensure that the provisions in a separation agreement are enforceable, it is good practice to have an independent valuation of the assets obtained at the time of the separation. This ensures that the provisions of the agreement are based on all relevant facts, and that neither party is inappropriately taking advantage of the other following separation.
Unmarried parents often mistakenly think that the child support provisions in the Ontario Child Support Guidelines will apply to them. While the Ontario Child Support Guidelines identify the applicable rates for child support in situations where there are no special circumstances, all of the factors in section 3 of the Guidelines must be addressed by the separating parties and dealt with in the agreement that is drafted between them. This includes considering which the parties will exercise decision-making responsibilities for the child and how parenting time will be divided between the parents.
There are other mistakes that can be made by separating parties at the time of a common law separation. The best way to avoid them is to enter into negotiations early on following the decision to separate. Legal representation by a lawyer is extremely helpful at this point, to ensure that both parties know what is at stake and the possible outcomes of not entering into a separation agreement.
Advance preparation of a case is essential to success in any negotiation.
Amending or Updating a Separation Agreement
An unmarried couple who enters into a separation agreement may decide at some point to update or modify the terms of that agreement. For example, they may want to update financial terms if their income has changed significantly in one direction or another (i.e. a raise or demotion). Or, they may want to address a specific tax benefit to which they have recently become entitled. While many separation agreements will contain a provision allowing or suggesting that any amendments or changes be in writing and signed by both parties , there will be no requirement that such agreement be filed with the court, since there is no action pending in court.
If the parties wish to enforce the updated or amended separation agreement, they would need to formally commence an action, serve the opposing party with process, and file the amended separation agreement with the Court. So, while the parties would not necessarily need the court’s approval to update the separation agreement, they would need the court’s approval in order to subsequently file the updated or amended separation agreement with the court.