Make Sure Your Settlement Agreement Is Specific

A settlement agreement deciding issues of property, custody and child/spousal support, like any other contract, should be as detailed and specific as possible. Failure to properly state who gets what and when can lead to ambiguities that may render your agreement invalid, or may lead to undesired consequences. At the very least, ambiguous terms or misunderstandings as to what the agreement says will lead to costly and time consuming litigation over the meaning of your agreement. To illustrate what can happen with vague or confusing terms in a property settlement agreement, let’s look at the case of Quinn v. Irons.

In the Quinn case, the divorced couple executed a settlement agreement that included a section entitled “College Savings Accounts.” This provision stated:

 “Husband shall retain the college education accounts that are associated with [the two oldest children] . . ., and these accounts are already held by Husband.  Wife shall retain the college education accounts that are associated with [the two youngest children] . . ., and since these accounts are currently held by Husband, the parties shall execute all reasonable documents that are necessary to forthwith transfer these two accounts from Husband’s name to Wife’s name.  Each party shall be identified as having the right of survivorship of the accounts held by the other party.”

After the college savings accounts were titled in the wife’s name, the wife withdrew $60,000 from one of the accounts for her own personal use. Once the settlement agreement was finalized and incorporated into the final divorce decree, the husband asked the court to find the wife in contempt of court because she withdrew money from their children’s college savings account. The wife argued that because the settlement agreement stated that the wife would “retain” the two (2) savings accounts, she was permitted to use the money for herself.

However, the trial court disagreed, and found that the settlement agreement was unambiguous and the savings accounts were to be used for the children’s college education, not the wife’s personal use. Therefore, the wife was held in contempt.

The wife appealed, and the Virginia Court of Appeals upheld the trial court’s decision. The Court found that the meaning of “retain” as used in the settlement agreement was to keep possession of or continue to have. The court found that this definition made sense when reviewing the agreement as a whole, because the nature of the college savings accounts was for the mother to hold on to until her children went to college. Thus, the mother was supposed to hold on to the savings account, not use the savings account to make withdrawals for her own use subject to penalties and fees.

So what is the takeaway from this case? First, you should always ensure that your settlement agreement is specific. The issue in this case would have never arisen had the agreement specifically stated that the savings accounts were to be used solely for the children’s college expenses, or that the accounts should be held in trust for the benefit of the children.

Second, you should always avoid using arguably ambiguous terms or words that can take on more than one meaning. In this case, “retain” could arguably have meant that the wife could enjoy use of the savings account because she had ownership of them and/or held on to them. By being specific and avoiding vague or ambiguous terms, you will avoid having to litigate the meaning or operation of your property settlement agreement.

if you are going through a divorce or considering drafting a property settlement agreement, you should always hire a family law attorney who can draft your agreement and ensure it does not suffer from a lack of specificity or ambiguities. The qualified family law attorneys at the DiPietro Family Law Group have years of experience representing clients in all sorts of family law matters and drafting solid settlement agreements. Call us today for a consultation at (703) 370-5555 or visit us online.

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