Drafting Settlement Agreements, Part 2

The perils of drafting settlement agreements was illustrated by a recent decision of the Supreme Court of Georgia. When efforts to save their marriage had failed, wife drafted a six page agreement in letter form.  Both parties signed the agreement.  The agreement provided for alimony as follows,

“Up until all of our children have graduated from college, you commit to provide the following income for the children and me: Upon to a total annual gross income of US$500,000 you commit to giving 85% of your total annual income to me to provide for me and our children, after paying for the following items:

  • All federal, state and local taxes
  • Home mortgage, homeowners insurance, and real estate taxes
  • Debt pay down on any debt owed at the time of our separation
  • Life insurance and disability premiums’
  • Medical, vision and dental insurance
  • School tuition

Above a total annual gross income of US$500,000 we agree that you would provide 50% of any amount over US$500,000 to me to provide for me and our children in addition to the above mentioned 85% of your total income that is US$500,000 or below. After all of our children have graduated from college, you agree to provide 50% of your total annual income to me, whether I remarry or not, whether I work or not.”

While this language may seem easy to understand, the Court found that this language was too vague to be enforceable.  The first provision lumps in child support and alimony, two different categories that must be dealt with separately.  The switch from the first arrangement to the second is premised on all of the parties’ children graduating from college, which may never happen.  Calculating husband’s income is not clear.  Different terms are used: “total annual income,” versus “total annual gross income.”  It is also not clear whether the list of deductions applies in the second arrangement.

While the court would not enforce the alimony provision, the court did enforce the provision in the letter agreement regarding property division.  The amount of alimony and child support would have to be set by the court independently, without an agreement between the parties.

It is very difficult for a layperson to draft an agreement that will be acceptable to the court.  The layperson simply cannot anticipate what the language will mean to a judge. On several occasions people have come to us with an agreement that they had drafted.  Fixing the problems in their agreement usually costs more than drafting the agreement correctly the first time. In this case wife may have let husband keep most of the property in order to get an alimony agreement favorable to her.  When the court enforced the property division and rejected the alimony, wife lost the property and probably will not get the alimony she bargained for.  The parties have already engaged in litigation over the enforceability of the agreement.  Now they must litigate alimony and child support.  All of this could have been avoided by having the agreement drafted correctly the first time.

Free eBook

Telling Your Children,
with Parenting Guidelines

Show me the eBook

Watch Our Videos

Free PDF

Download Now