Poorly-Written PSA’s Can Trip You Up After Divorce
It’s a long established principle in New Jersey family law that a provision contained in a matrimonial settlement agreement (commonly called a “Property Settlement Agreement,” or “PSA”) can be modified post-judgment when a legitimate “substantial change of circumstance” occurs.
What kind of substantial change in circumstances? Pursuant to the Appellate Division’s 2000 Brawer v. Brawer decision, the change must be one capable of rendering the provision at issue unenforceable as a matter of equity.
For example, a husband may have agreed to pay his wife $52,000 annually, or $1,000 per week in alimony at the time of divorce, based on his income of $225,000 annually and her income of $45,000 as spelled out in their PSA. Then say our hypothetical husband is seriously injured in a car crash, such that he can no longer earn $225,000 annually as a medical surgeon (or anywhere close to that amount).
Other common changes in circumstances include involuntary long-term unemployment (typically more than six months) and significant changes in custodial relationships (as in when the child support-paying parent goes from exercising zero overnights annually with his children to 110).
These scenarios would likely be deemed “substantial changes in circumstances” warranting support modifications by the Court. Every situation, of course, turns on the case-specific facts. In my first scenario, it would be highly inequitable to make this husband pay alimony at a level previously contemplated by the parties when it is no longer possible for him to do so regardless of what the parties agreed to.
Unfortunately, most post-judgment applications for modification are much less cut-and-dry…
Take for example the brand reported decision in Musico v. Musico out of Ocean County, New Jersey. It’s extremely rare for a trial level family decision to be approved for publication (meaning it is assigned precedential value). In this case, however, the Committee on Opinions clearly recognized the impact this decision could have on divorcing couples in New Jerseyans.
The Musico’s marital settlement agreement provided that the Defendant Husband would pay his Plaintiff Wife “an amount significantly greater than the child support guidelines,” or $161 per week plus the cost of her health insurance. Moreover, Plaintiff Wife agreed to permanently waive any right to spousal support from Defendant Husband.
Of note is the fact the agreement did specify that this waiver was made in exchange for a heightened level of child support.
So when Defendant Husband filed a motion alleging a change of circumstances based on increased parenting time, he also alleged that there was no connection between his ex-wife’s alimony waiver and heightened child support obligation. Plaintiff Wife disputed this account, countering that it would therefore be inequitable to lower child support when she had bargained away alimony for it.
Unsurprisingly, the Court observed how “this issue might certainly have been easier and faster to resolve had the parties expressly spelled out the alimony/child support relationship in their written agreement.” Nevertheless, the Court believed that a relationship with the waiver was a reasonable inference and, furthermore, that the parties’ existing agreement to an above guidelines amount of child support was “extremely significant” as one of many relevant factors to consider under N.J.S.A. 2A:34-23 and N.J.S.A. 9:17-53. The judge ultimately decided that the increase in Defendant’s overnights was outweighed by the fact that he had experienced a substantial increase in his income since the time of divorce; hence, his request for a downward modification was denied.
The Court did leave the door wide open for him to return and request a modification if he experienced a true substantial change in circumstances affecting his ability to pay.
Musico provides New Jersey divorce litigants with two particularly valuable takeaway lessons: (1) even the best-written marital settlement agreements can be amended over time, but (2) clarifying the relationships between the various individual agreements incorporated into your PSA can aid the court down the road if your ex-spouse attempts to “re-litigate” any aspect of your divorce.
Don’t take a chance! The Property Settlement Agreement (PSA) will be one of the most important documents in your life. Our firm has experienced matrimonial lawyers on staff who are ready to defend your rights both before, during and after divorce if need be. We know the issues, pitfalls and traps that divorce litigants often fall into; therefore, we can help you avoid them by crafting a thorough, forward-thinking document. If you have a question regarding matrimonial settlement agreements, child support or alimony, please contact the family law lawyers at DeMichele & DeMichele online today. Call now to schedule your confidential consultation (856) 546-1350.