Between marriage and divorce is a less final state known as legal separation. In a legal separation couples don’t just live apart, they also file with the court a separation agreement that addresses many of the same issues that are addressed in a divorce, such as custody, child support and property division. If the parties later divorce, the separation agreement often becomes the basis for the divorce agreement.
Once the court has approved a separation agreement, it becomes a binding and enforceable contract between the parties. The courts encourage agreement as an alternative to litigation, and a separation agreement will usually be enforced unless one party can prove the agreement violates the law or goes against public policy. See ORS 107.104.
For some couples, the road from separation to divorce is a long and winding one, and their circumstances may change dramatically along the way.
In Patterson and Kanaga, decided by the Oregon Court of Appeals on April 27, 2011, the parties remained married for seven years after legally separating. In fact, the parties continued to live in the same home during those years because they felt it was best for their children. However, during that time they adhered to the terms of their separation agreement. They both contributed to family expenses, but they kept their finances entirely separate.
During those seven years the husband liquidated his retirement account in order to pay his share of family medical expenses, and he took on some credit card debt. Meanwhile, the wife’s assets increased in value from $700,000 to $6.4 million.
When the wife filed for divorce, the husband argued, among other things, that the property division they had entered into seven years earlier was not enforceable because it violated the law and contravened public policy. He based this argument on ORS 107.105(1)(f), which provides that a dissolution court shall divide marital property in a manner that is “just and proper in all the circumstances.”
Given how things had changed since the parties entered into their separation agreement, the husband argued that it would be inequitable to leave him with what might work out to be a negative net worth, while the wife walked away with millions.
If it had been up to the court to divide the parties’ assets in a just and proper manner, it would probably have settled on a division that left the husband in a better position. However, the court ruled that the parties’ separation agreement was valid and it had no basis to not enforce it. The court has ruled in previous cases that when a couple reaches an agreement that is different from what the court would order – for example, to terminate spousal support upon remarriage (Edwards and Edwards, 73 Or App 272, 698 P2d 542 (1985) or to extend child support longer beyond the age of 21 (Reeves and Elliot, 237 Or App 126, 238 P3d 427 (2010)) they cannot ask the court to intervene later simply because they have regrets.
Separation agreements can be helpful in many ways, but establishing terms that cannot be changed may lead to unintended – and unpleasant – results. It should never be assumed that the terms of an agreement can be modified just because changing circumstances make it seem less fair. When it comes to separation agreements, be careful what you ask for . . . because you might not like it when you get it.