Can I Dispute the Enforceability of my Marital Agreement after a Divorce?
Often times, parties sign premarital agreements prior to getting married as a way to protect their respective assets in the case of a divorce or death. On the flip-side, many people enter into marital settlement agreements as a way to finalize their divorce. Whether you entered into one or both of these types of agreements, you may be thinking to yourself, can I dispute the enforceability of my agreement?
Indiana law does favor marital agreements in lieu of court orders after a hearing. In particular, Indiana enacted the Uniform Premarital Agreement Act at Indiana Code 31-11-3-1 et seq., which outlines the requirements for a valid premarital agreement, along with outlining the ways in which to potentially dispute the enforceability of a premarital agreement. Additionally, Indiana law does encourage amicable settlements of divorces through a settlement agreement by providing for them in Indiana Code 31-15-2-17. In most cases, marital agreements cannot be modified or set aside unless: 1) one of the circumstances occurred as outlined in Trial Rule 60, 2) the marital agreement explicitly allows for a modification, or 3) the parties mutually consent to a modification.
As stated above, premarital agreements are favored in Indiana as evidenced by the enactment of the Uniform Premarital Agreement Act. The Act allows for the settlement of all issues pertaining to a divorce through a premarital agreement with the exception of child-related issues, such as custody, parenting time, and child support. Furthermore, such an agreement can also address various estate planning issues so long as it doesn’t negatively affect the right of a child to receive proper support.
A premarital agreement is, in effect, a contract between two parties. In order for a contract to be enforceable, it requires that there be ‘consideration’. Consideration is the concept of legal value in connection with a contract and is anything of value promised to another, which can take the form of money, physical objects, services, promised actions, abstinence from a future action, and much more. Typically, a contract is not considered binding unless both parties offer consideration. For example, if you wanted to hire a contractor to renovate part of your house, the contractor’s consideration would be to perform the desired renovations and your consideration would be payment of money for the services. As it pertains to a premarital agreement, the consideration is generally the promise to marry the other person. Thus, a premarital agreement is valid if it is “executed in contemplation of marriage”, is in writing, and the parties subsequently marry. Upon marriage of the parties, the premarital agreement becomes binding.
Under the Indiana Code, a premarital agreement is unenforceable if a party seeking to overturn the agreement proves that: 1) the party did not execute the agreement voluntarily, or 2) the agreement was unconscionable when the agreement was executed. These potential grounds for invalidating a premarital agreement are very fact-specific so make sure to contact a local attorney to see the likelihood of invalidating an agreement in your particular case.
Another potential avenue for invalidating part or all of a premarital agreement pertains to spousal maintenance. If a provision of a premarital agreement limits or eliminates one party’s right to seek spousal maintenance in a divorce, and due to circumstances not reasonably foreseeable at the time of the execution of the agreement it would cause extreme hardship on that party, a court may require the other party to provide maintenance to the extent necessary to avoid extreme hardship.
One last very limited instance to challenge a premarital agreement is if the marriage was void. If the marriage was void, then the agreement is only enforceable to the extent necessary to avoid an inequitable result.
Also as stated above, courts in Indiana do encourage parties to resolve their divorces through amicable settlement agreements as compared to having a judge decide the result after a court hearing. Indiana Code 31-15-2-17 provides that settlement agreements resolving a divorce can provide for maintenance, disposition of property and debts, and the care, custody, and support of the children of the marriage. The statute further states, however, that the agreement, if approved, “shall be incorporated and merged into the decree and the parties shall be ordered to perform the terms,” or “the court may make provisions for maintenance, disposition of property, care, custody, and support of children of the marriage.”
There is not statutory basis for a court to adopt some provisions of an agreement and not others. The law only allows for a court to adopt the agreement, or reject it, in whole. Additionally, a property settlement agreement that is incorporated into a final divorce decree is a binding contract, and the court may not modify that settlement agreement, absent a showing of fraud, duress or undue influence.
Furthermore, the statute goes on to explain that a marital agreement is “not subject to modification by the court, except as the agreement prescribes or the parties subsequently consent.” An exception to that rule would be if there is an ambiguous provision in the agreement. In such a case, the court may interpret that provision by amending or clarifying the provision to effect the intent of the parties. Similar to that of premarital agreements, marital settlement agreements become binding contracts and are construed according to the general rules of contract construction.
Knowing when a settlement agreement becomes binding may have a bearing on whether you can set it aside. If you have a mediated settlement agreement, meaning the agreement was reached through a mediation, it is binding when it is signed by the parties and their attorneys. Thus, once all the parties sign it, it cannot be set aside. On the other hand, non-mediated settlement agreements are only binding once the court approves the agreement. Therefore, a party can repudiate the agreement after signing it, but before the court approves it.
Typically, settlement agreements may be set aside under Trial Rule 60, which contains provisions for relief from a judgment. Under Trial Rule 60, the listed reasons are: 1) mistake, surprise or excusable neglect; 2) any ground for a motion to correct errors; 3) fraud; 4) entry of judgment was by default; 5) except in cases of divorce, the record does not show the party was represented by a guardian; 6) the judgment is void; 7) the judgment has been satisfied, released, or discharged, or it is no longer equitable that the judgment should have prospective applications; and 8) any reason justifying relief from the operation of the judgment not listed above. Numbers 4 and 5 are not applicable to divorce settlements. Number 2 generally would not apply as a motion to correct error is filed as a result of a court order, not a settlement agreement. For the remaining reasons, the trial rule requires that the motion be filed within a reasonable time for 6, 7, 8, and not more than one year after the judgment for 1 and 3. The reasons most often alleged to set aside an agreement would be fraud or mistake. However, on occasion, an obligation under a settlement agreement may no longer be possible or reasonable under the circumstances. In such a case, reason 7 would apply. Additionally, reason 8 is sort of a “catch all” provision which allows for some room to seek to set aside an agreement.
The likelihood for setting aside a marital agreement is very fact specific so it is important that you consult with a local attorney to see what your rights are. If you are thinking about a divorce, child custody, or support case, the attorneys at Banks & Brower, LLC can help you. Give us a call at (317) 870-0019, or email us at email@example.com. We are available to take your call 24/7/365.