Family Settlement Agreements Explained
Family Settlement Agreement (FSA) refers to an agreement of the parties to a divorce or separation where they make decisions for themselves by way of a contract rather than by making motions in the Family Court; a form of alternative dispute resolution. Typically, disputing spouses have already negotiated a temporary agreement and been to court a number of times. After all those motions in Court, the parties may be ready to settle their differences amicably and move on with their lives. The Court may not have approved of the temporary, pendente lite (during the litigation) arrangements, but allowed the parties to try to work things out without the intervention of the Court. To that end, they will often suggest that the parties consult their attorneys and attempt to resolve their problems outside of the Court. If the parties are finally able to come to terms, they will submit a Family Settlement Agreement (FSA) to the Court to be incorporated into the Final Judgment of Divorce. The Family Settlement Agreement generally resolves all outstanding issues as to parenting time (custody), child support and, in some cases , spousal support/alimony and equitable distribution of the marital estate. In fact, in some cases, an FSA is arrived at before a complaint is even filed in the Court. However, it cannot be finalized until the parties have filed their complaints, exchanged their Case Information Statements, filled out and submitted their Joint Certification of Equitable Distribution and if they have children, their Parent’s Certification of Litigated and Settled Cases. After a review of the documents, the Court will issue an advice letter stating whether the parties’ FSA appears to be fair, equitable and in the best interest of the children (if the parties have children). If the parties enter into a Collaborative Divorce process, then the FSA would be binding upon the receipt of the final entry of Judgment. The FSA binds the parties outside of the Court until the Final Judgment is entered by the Court. However, if there is a problem with the FSA, the parties have the option to file with the Court, a Motion to Enter Judgement. A Motion is filed when a party wants the court to make an order. In this case, the Court would make an Order pertaining to the FSA.
Components of a Family Settlement Agreement
A family settlement agreement template should contain the following essential elements: Identification of the Parties: A family settlement agreement template must clearly identify the parties at the outset. This includes full names, addresses, and relevant identifying information on each individual involved in the case. This is important because a comprehensive and robust family settlement agreement means all the people involved in a case are likely to wind up living in various locations throughout the world. For instance, a divorce case may involve a married couple who now have foreign citizenship. A partition case on real property may involve a few or more relatives who live on opposite sides of the globe. Distribution of Real and Personal Property: In a partition case or a division of marital assets and liabilities case, there must be an equitable and fair distribution of all real and personal property that was obtained by the parties during the marriage. This may also include real and personal property that is owned by third parties who should be joined with the litigation to address their respective interests. Each item of real or personal property should be clearly identified, and the specific manner in which it will be divided amongst the parties should be described in detail. Further, a schedule of values should be attached to the family settlement agreement template; this values schedule will enable a court to assess whether the proposed distribution of assets is fair and reasonable. The schedule of values is also important because when a judge or matrimonial referee or court commissioner is faced with the difficult job of analyzing the fairness of a settlement agreement, the proposed distribution of assets must be cast in sufficient detail in order for the plan for division of marital property to be approved. This is important because courts rarely reject settlement agreements between parties as long as the terms of the agreement clearly set forth the material facts necessary to allow a judge perform his/her job. Obviously, a judgment entered on the basis of a settlement agreement that is not fair and equitable can and should be set aside and vacated. To prevent such a tragedy from occurring, the parties should always consult with a family law attorney about the proposed terms of their family settlement agreement template. Confidentiality: To the extent necessary to protect the parties from future allegations of misconduct in the dissolution of the relationship, it is wise to include in the family settlement agreement a confidentiality clause that prevents the parties from discussing the details of the matter with remote family members or other individuals who are not directly involved in the case. Although a confidentiality clause is not the province of a traditional family law court, and the lack of a confidentiality clause will not void the family settlement agreement, including such a clause can help the parties avoid unnecessary heartaches or allegations in the future.
Drafting Your First Family Settlement Agreement
The first step in the process is for the client and lawyer to have the initial discussion about moving forward with negotiation of the issues. Once that decision is made, the lawyer will then draft an outline of the terms to be agreed upon with an initial discussion of those terms. Parties can then discuss terms with their respective attorneys and decide whether to first put together a global outline or proceed with a more formal approach taking each item at a time. In most cases, the parties will agree on the outline of all terms and then individually review the terms with their counsel. If everything looks good, the parties will come together and sign the first version of the agreement. At that point, either party has the right to waive the right to review the agreement with their attorney and sign that particular outline. Once that signature is obtained, the party who had the agreement reviewed by an attorney will have the right to finalize the agreement. That final agreement will be exchanged amongst the parties and will become the binding terms to satisfy their divorce.
Legal Issues and Conditions
In all legal agreements, and especially in family settlement agreements, there are a few critical legal factors to consider. The first is jurisdictional rules. Are the parties and the subject matter covered by state and federal laws? The answer to that question will give you a good sense of whether or not you have jurisdiction and will help you identify your court system.
There are also common law considerations. What is the enforceability of the contract under common law? This is complicated by the fact that there is no real consensus among the states and different states had different answers (for example, in California, spouses can’t contract away spousal support awards).
After that there are the Uniform Laws. There are a number of notable example of this type of state law that will help you make sure that the agreement you have written follows orthodoxy for your state. Some examples are the Uniform Adoption Act or the Uniform Uniform Arbitration Act (it’s called that because it was so good, states adopted it as it was in the original form), or the UCC, which covers the sale of goods. It’s important to know what uniform laws address your situation and make sure you meet their requirements (if any).
Then finally, when you are trying to draw a line between the Agreement and the Court, there are Statutes of Limitation. These "time-out" requirements limit the time in which you can collect on an unpaid debt or take a party to court. There are different rules governing different areas of law, so this is a good way to show the significance of your contract – if someone breaks the law, how long will be able to take them to Court?
Things to Avoid
Common Mistakes to Avoid When Creating a Family Settlement Agreement Template
One of the biggest pitfalls people encounter when creating a family settlement agreement template is assuming that everyone knows what the terms mean. In other words, don’t use legalese to describe contractual language. Instead, be as clear as possible.
Here are some common mistakes to avoid that will help you create a quick and useful family settlement agreement template.
Do Not Make Agreement Too Vague
All of the relevant parties must know exactly what is being agreed to legally. Vague language is in the family settlement agreement and enforceable. It can be hard to determine what terms mean.
As a rule of thumb, if someone fails to hold up his or her end of the bargain , you won’t have an effective legal document to force them to comply.
Avoid Unintentional Parties
For a family settlement agreement to be enforceable, all parties must sign it. Also, the document must be created with all relevant parties in mind. This means that anyone with even a remote chance of being considered a party should be included in the initial agreement.
As an example, a family settlement agreement regarding children should include the names of anyone involved in the custody process, like biological or adoptive parents, foster parents, grandparents, or other legal guardians. If someone is left off of an agreement template, he or she could seek to become a party later and enforce the terms of the agreement.
Example of a Family Settlement Agreement Template
For the purposes of this example, let’s assume that the child’s mother Susan was determined by the Court to have all primary rights and responsibilities as a custodial parent. That she may determine the child’s living arrangements and transportation as well as choose his schooling through age 18. This can be modified if parenting time changes dramatically.
The example templatized family settlement agreement below will show a generic layout to such a document.
PETITIONER: MOTHER RESPONDENT: FATHER (Omit address information and account numbers for privacy protection)
THIS FAMILY SETTLEMENT AGREEMENT is entered into as of _______ by and between PETITIONER, MOTHER, hereinafter referred to as "MOTHER" and RESPONDENT, FATHER, hereinafter referred to as "FATHER". MOTHER and FATHER are hereinafter referenced collectively as the "PARTIES". The PARTIES have reached the following agreement:
OR
OFFERED BY MOTHER OFFERED BY FATHER
(HIS SIGNATURE) (HER SIGNATURE) (BOTH SIGNATURES) (DATE SIGNED) (DATE SIGNED)
When to Get Professional Assistance
Family members who wish to resolve their issues and disputes among themselves without the intervention of the Courts will often enter into a family settlement agreement. It is important that the terms of the agreement be drafted with clarity so as to ensure that there are no misunderstandings when the agreement is presented to the Court for approval.
It is highly recommended that a family settlement agreement by drafted by your attorney when:
● the assets of the estates involved in the settlement are not jointly held, thus requiring an explanation of the property interest and ownership of each party as to each of the items of property subject to the settlement;
● the assets to be distributed to the parties involves any real estate, it will be necessary to describe both the improvements and approximately to the nearest tenth of an acre, the location of the easements, rights of way, utilities , etc.;
● the settlement involves gifts or bequests which have been made to the family member referred to in the will;
● gifts have been made by parents or the decedent to the parties to the settlement prior to death or during lifetime;
● the parties to the settlement do not agree as to the decedent’s errors and omissions in the preparation of his/her wills or deeds;
● the parties to the settlement are not thoroughly familiar with the interpretation and drafting of wills and deeds and expectations of the outcome of their representation in Court;
● a family member is claiming undue influence, lack of capacity, improper preparation of the will or undue influence with respect to gifts or transfers made to family members by parents or the decedent;
● a legal determination of the surviving spouse’s elective share has to be made;
● a determination of the rights of a divorcing spouse has to be made; and
● a determination of the rights of a spouse in a joint saving account, pension plans, life insurance policies, etc., has to be made.