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What Is a Marital Settlement Agreement In An Illinois Divorce?
It’s often said that 99% of divorces end up settling rather than go to trial. But what does that mean? What is the result of a divorce settlement in Illinois?
The end result of divorce in Illinois is a series of documents:
The Judgment For Dissolution Of Marriage is a document which actually divorces the married party.
If there are no children and little to no assets, debts and support obligations, the Judgment of Dissolution can stand on its own and just allocate a few assets, waive maintenance, dissolve the bonds of matrimony, allow a return to maiden names and retain jurisdiction.
If the divorce has any assets, debt or support obligations of any significant level or complexity than a separate document called the Marital Settlement Agreement.
The Marital Settlement Agreement (MSA) is a detailed contract outlining all of the financial aspects of the divorce. So, the Marital Settlement Agreement is signed by both parties.
A signed contract is enforceable but does not have the automatic power of a court order. A court order does not need to be ratified before being enforced. A court order is already enforceable via further court order and additional orders such as an order for contempt. So to turn the Marital Settlement Agreement (a contract) into an order, the Marital Settlement Agreement is then incorporated into the Judgment for Dissolution of Marriage to have the effect of being part of the final order. Thereby turning a contract into an enforceable court order.
Incorporating The Marital Settlement Agreement In the Judgment For Dissolution Of Marriage
“Unless the agreement provides to the contrary, its terms shall be set forth in the judgment, and the parties shall be ordered to perform under such terms” 750 ILCS 5/502(d)
In lieu of writing it all out in the judgment, we just incorporate the terms in the judgment.
The Judgment For Dissolution of Marriage will usually read:
“The Marital Settlement Agreement entered between the parties herein above set forth, a copy of which is entered simultaneously, is incorporated herein as if set forth verbatim and all of its terms and provisions are hereby expressly affirmed, approved and adopted as the order and the Judgment of this Court.”
After incorporation, a Marital Settlement Agreement can be enforced.
“Terms of the agreement set forth in the judgment are enforceable by all remedies available for enforcement of a judgment, including contempt, and are enforceable as contract terms.” 750 ILCS 5/502(e)
The Importance of Agreement In A Marital Settlement
The entire divorce process, both formally and informally is geared towards settlement.
“To promote amicable settlement of disputes between parties to a marriage attendant upon the dissolution of their marriage, the parties may enter into an agreement containing provisions for disposition of any property owned by either of them, maintenance of either of them, support, parental responsibility allocation of their children, and support of their children as provided in Sections 513 and 513.5 after the children attain majority” 750 ILCS 5/502(a)
An Illinois divorce court will let you agree to almost anything. So long as the agreement is not “unconscionable”
“The terms of the agreement…are binding upon the court unless it finds, after considering the economic circumstances of the parties and any other relevant evidence produced by the parties, on their own motion or on request of the court, that the agreement is unconscionable.” 750 ILCS 5/502(b)
Even if the Illinois divorce court finds the agreement unconscionable, they just make you go back and agree to something else.
“If the court finds the agreement unconscionable, it may request the parties to submit a revised agreement” 750 ILCS 5/502(c)
The Terms Of A Marital Settlement Agreement
Every Marital Settlement Agreement is different. Every marital settlement agreement can say, literally, whatever the parties agree to. There is no standard Marital Settlement Agreement.
Still, every Marital Settlement Agreement addresses some fundamental issues in a similar form.
I was tempted to type out a sample Marital Settlement Agreement but that would defeat my thesis that every good Marital Settlement Agreement is different. Also, a quality Marital Settlement Agreement is upwards of 30 pages. So, instead, I will list a sample of subjects that a Marital Settlement Agreement can address:
- Recitals. Recitals are a brief background of agreed facts regarding the marriage and the divorce:(when the couple married, how many kids the couple have, that the couple has agreed to this settlement. These facts help give context and clarity to the agreed terms which follow.
- Preservation of Rights. A Preservation of rights clause gives notice to both parties that while they are signing this agreement, all other rights are still retained outside of this agreement, like the ability to sue each other on other bases.
- Maintenance and Child Support. Child support amounts are affected by Maintenance amounts and both stem from the incomes of the parties. So, it becomes more functional and efficient to deal with both matters in the same clause. If the parties are not requesting maintenance, then they must waive their right to maintenance forever in this clause.
Maintenance should state the specific amount that one party pays to the other and how that amount is to be paid (maintenance cannot be garnished through the State Disbursement Unit unless there is a concurrent child support order).
The terms for which maintenance may be increased, diminished or terminated may also be included in this clause. You can make your own terms which the court will adopt if not unconscionable. Or, you can restate the law regarding modification and termination of maintenance for the sake of clarity.
Child Support is always calculated after Maintenance and should be included after maintenance. It should be memorialized as to how child support was calculated (pursuant to guidelines or based on needs) for the purposes of future modification.
The manner in which child support is paid should also be detailed (Child support is almost always paid through the state disbursement unit for the sake of the free accounting service)
The terms and date of the child’s emancipation should be included. The events that trigger emancipation are usually:
a) The child’s attaining the age of 18 years of competition of a high school education, whichever last occurs, but no later than the child’s 19th birthday if still attending high school; or
b) The child’s maintaining a full-time residence outside the home of either parent, exclusive of residence at a secondary boarding school, camp, or similarity facility; or
c) The child’s obtaining full time employment, exclusive of employment during school vacation periods; or
d) The child’s induction in the United States armed services or National Guard; or
e) The child’s marriage; or
f) The child’s death.
- Children’s Expenses. While the Allocation of Parenting Time and Parental Responsibilities outlines the decision-making for the children and parenting schedule, it does delve into financial responsibilities for the child. It is thought that financial issues can confound what determines is in the best interests of the child.
The determination of what expenses are valid is made by the Allocation of Parental Responsibilities, extracurricular, health and education sections. Children’s expenses can be divided by amount, percentages or percentages with spending caps.
Children’s college expenses can also be outlined in this section. For most children that aren’t in high-school, a detailed college-expense order can be premature. In lieu of that, a restatement of the current statute regarding college expenses can be an effective notification of each parent’s expectations regarding college expenses.
- Taxes. The parties cannot file taxes together for the year they are getting divorced but they can still file taxes and resolve any tax liabilities for prior years together.
The right to declare the children on their respective taxes can also be included in the Marital Settlement Agreement. Without an agreement incorporated into an order, all the deduction related to the child will go to the parent exercising the most parenting time throughout the year.
- Real Property. All real estate must be described in detail. An address is usually sufficient. A county assessor’s property identification number is even better.
If one party keeps the property, the other party shall collaborate and sign any documents necessary to ensure the property remains the property keeper’s sole and separate property. This document is usually a quitclaim deed but, more frequently, one party refinances the party and the refinancing company takes care of all of the details in order to remove the other party’s name from the property and award the other party their share of the house’s equity.
The property-keeper shall then be responsible for any debts associated with this property, including but not limited to, property taxes, utility expenses, mortgage payments, etc., and shall indemnify and hold the other party harmless from the same.
- Personal Property Settlement. All other property can be described and allocated in this section.
Individual items such as jewelry and furniture are described as best as possible and the physical possession of these items is usually effectuated before the Marital Settlement Agreement is signed and thus memorializes that division.
Accounts are usually described by the institution they are held in followed by the last four numbers of the particular account. It only needs to be specific enough so that the parties and a possible third-party referee can effectively ensure their proper allocation. Otherwise, privacy is primary in this document which is usually in the public record.
Pensions and other tax-deferred retirement accounts are described and instructed to be divided by QDRO to avoid a taxable event to either party.
- Debts and Liabilities. Debts and liabilities are identified and divided.
If one party becomes responsible for another party’s debts, that party is said to indemnify the indebted party. So, a failure to pay a debt pursuant to the Marital Settlement may cause the creditor to sue the original debtor, but the original debtor can then sue the indemnifier in divorce court.
- Attorney’s Fees. Parties to a divorce will often still owe attorney’s fees at the end of the divorce. These fees are always marital liabilities so they must be allocated.
Typically, for the sake of the agreement, each party shall be responsible for all attorney’s fees and costs incurred by them with any attorneys retained by themselves.
To eliminate the marital issue of a debt to attorneys, each party hereby expressly waives their right to a hearing on contribution of fees.
- General Provisions. Any number of details can be included in this section to better help the parties and future attorneys and judges to determine the execution of the Marital Settlement Agreement’s terms. These are usually restatements of general principles of contract law such as non-modifiability, execution of other documents, release of attorneys, mutual release for claims of injury, mutual release of additional rights, waiver of estate claim, incorporation and merger, captions and construction, governing law, cooperation, and modification by agreement.
These concepts, while described in a Marital Settlement Agreement are usually functional reminders that a Marital Settlement Agreement, at its essence, is a contract and must be interpreted as such.
These categories are just a sample of the possibilities. Marital Settlement Agreements must be crafted to the facts of the case and the needs of the parties. I have written Marital Settlement Agreement that divide the expense of dog food for the life of a dog. I have written Marital Settlement Agreements that outline complicated payoffs in lieu of the division of business property, investments and bitcoin. The best deal for both parties is usually the most unusual. People who are getting divorced want very different things…so I give it to them.
How Does A Marital Settlement Agreement Get Interpreted
After a Marital Settlement Agreement is signed it is binding upon the parties but does not have the full power of enforcement until it is incorporated and entered with the Judgment of Dissolution.
The parties are then bound to follow the clauses of the Marital Settlement Agreement or be punished for their failure to.
But, as the years pass circumstances change and memories of the context of the Marital Settlement Agreement fade. All that is left is the Marital Settlement Agreement itself. So, when a disagreement as to how to execute the Marital Settlement Agreement’s terms arises, we must first turn to the Marital Settlement Agreement as we would any written contract.
“Interpreting a marital settlement agreement is a matter of contract construction. In re Marriage of Hulstrom, 342 Ill.App.3d 262, 269, 276 Ill. Dec. 730, 794 N.E.2d 980 (2003) As such, courts seek to give effect to the parties’ intent. Hulstrom, 342 Ill.App.3d at 269, 276 Ill. Dec. 730, 794 N.E.2d 980. The language used in the marital agreement generally is the best indication of the parties’ intent (In re Marriage of Hahn, 324 Ill.App.3d 44, 46, 257 Ill. Dec. 803, 754 N.E.2d 461 (2001)), and when the terms of the agreement are unambiguous, they must be given their plain and ordinary meaning (In re Marriage *242 of Sweders, 296 Ill.App.3d 919, 922, 231 Ill. Dec. 9, 695 N.E.2d 526 (1998)). However, where the language is ambiguous, parol evidence may be used to decide what the parties intended. Hulstrom, 342 Ill.App.3d at 269, 276 Ill. Dec. 730, 794 N.E.2d 980.” In Re Marriage of Dundas, 823 N.E.2d 239 (Ill. App. Ct. 2005)
The lawyers and the judge in a case involving disagreement as to the meaning of a Marital Settlement Agreement look to the intent of the parties using only the Marital Settlement Agreement. Should the terms be vague, outside evidence of the intent may be considered.
In lieu of interpreting the past intent of the parties, the parties typically just petition the courts to modify the terms of the Marital Settlement Agreement to reflect the current facts. This is an option for virtually any aspect of a Marital Settlement Agreement with the exception of division of assets and waiver of maintenance.
Preparing an effective Marital Settlement Agreement is not a matter of plugging in facts and intentions. A Marital Settlement Agreement should balance clarity and brevity with flexibility and specificity. This is no easy feat. When it comes to writing a contract and interpreting a contract, the most important thing is, often, not what is in the contract…but what is not included in the contract. This distinction takes intelligence and experience.