A recent appellate decision demonstrates hazards that may be encountered when parties in divorce actions sign separation agreements that appear to meet the intent of the parties, but are found not to do so.
A separation agreement stated that the parties would divide one spouse’s 401(K) retirement plan balance. When the parties attempted to obtain a QDRO for the plan, they learned that although there indeed was a 401(K) plan, it had a balance of $0. Instead, the spouse also had a “security plan pension” with a value of around $30,000.
The domestic relations court found that the parties intended to divide the retirement plan, and modified the agreement to provide that the security plan balance would be so divided. The party with the security plan appealed, arguing that the separation agreement stated that the parties knew what the assets of each were, that the agreement did not include the security plan benefits, but rather, the $0 balance 401(K) account. The appellate court reversed the decision of the domestic relations court. It found that the court had modified the terms of the agreement, which was an abuse of discretion under the circumstances. Of particular note was the fact that indeed a 401(K) plan existed…it just had a $0 balance. The security plan was not included in the separation agreement, and therefore, could not be divided by the court. Woronka v. Woronka, 2011-Ohio-498, (OHCA5).
Many years ago a claim arose against a lawyer for drafting an agreement in a divorce action providing that one party agreed to pay for a child’s “parochial” schooling. That party was Catholic, and the intent was that the child attend a Catholic school. Instead, the other parent who had custody elected to send the child to a non-Catholic parochial school. The court found that the term “parochial” was not an exclusive reference to Catholic schools, but rather, applied to any school with a religious affiliation of some sort. This situation resulted in a lawyer with an unhappy client.
Another issue that arises more frequently in the domestic relations context is the failure of a client to fully understand the terms of an agreement, particularly if the client later learns that the agreement she/he signed could have been more favorably worded than was the case. This situation usually occurs with the benefit of hindsight. One client was unhappy that his support obligation could not be modified under the terms that he had agreed to. Although the client was also protected positively by an agreement that would not allow the ex-spouse to challenge the support obligation on the basis of a change in circumstances if his fortunes improved, a downturn in his fortunes lead to a claim against his lawyer. The client alleged that had he understood that the support agreement could remain modifiable by the court, he would have elected to include such terms.
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