It is a fairly well established premise that a change in circumstances can warrant a court application regarding alimony or child support. However, does the same apply to a modification to a Property Settlement Agreement (“PSA”)? Can this be changed for the same reasons?
First, it is important to understand the legal definition of a property settlement agreement. During the divorce process, the parties have an opportunity to negotiate the terms of the end of their marriage and commit them to paper. Advantages of a property settlement agreement include:
- Prospect of reduced legal fees for a non-litigated matter
- Opportunity for the couple to participate in decisions
- Ability to streamline the divorce process
- Avoidance of potentially long and stressful court appearances
Once a couple enters into a property settlement agreement, the document is presented to the court for review. Upon approval, it is adapted as part of the final divorce order. Courts are hesitant to set aside or modify property settlement agreements; they often represent concessions made by the parties at the time of the divorce. Exceptions to this rule include such issues as fraud, undue pressure, or incompetency.
The New Jersey Appellate Division recently rendered an unpublished decision regarding this issue. This case involved a couple, married in 1970, and divorced in 2002. The couple entered into a property settlement agreement, which included a section for Support and Maintenance. The defendant was the husband and was required to pay his former spouse alimony. The amount escalated annually to a maximum rate in 2023. The alimony would terminate at that time, or upon death of either party, or the wife’s remarriage.
In 2013, the husband made an application to the court requesting premature termination of alimony. Not only had the defendant retired from work due to a physical disability; the plaintiff’s income had increased significantly and financial need was no longer an issue. The plaintiff also lived with her long-term boyfriend, which resulted in a substantial reduction in her expenses.
Meanwhile, the plaintiff asked the court to modify the property settlement agreement if alimony was terminated or reduced. It was her contention that equitable distribution payments should then be increased. The trial judge terminated the alimony, and also doubled the defendant’s payments for equitable distribution. According to the lower court judge, the former husband would have otherwise received a windfall and deprived the plaintiff of the full payment she should have received under the PSA.
The Appellate Division overruled the lower court’s decision. It relied on other case law that said property settlement agreements should only be set aside when there is “clear and convincing evidence of fraud or other circumstances”. Both parties willingly signed the agreement, including the payment arrangements for equitable distribution. They also acknowledged that the agreement was fair and equitable.
When negotiating or considering modification of a property settlement agreement, it is crucial to secure competent legal advice such as Attorney Sam Stoia. Contact Sam for a complimentary appointment to discuss your case.