Do Both Parties Have to Sign a Separation Agreement?

This is a common question people might ask when going through a divorce. Generally, the question is posed to our attorneys by the person in the superior financial position, meaning with more to lose if the legal norms were applied or if the matter were to proceed to a final orders hearing in front of a judge or magistrate. The questions is not inappropriate in that it is both common sense and human nature for people to strive for both quick and advantageous resolutions to their divorce cases. However, there are various legal technicalities and pitfalls which must be complied with before an agreement is safe in terms of procedural and substantive compliance.

Firstly, “separation agreement” is the legal term for the final agreement in a divorce case which sets forth the terms for division of marital property, maintenance (alimony), division of debt, and other financial issues. Separation agreements often also set forth both parenting time (visitation) and custody provisions. Pursuant to C.R.S. 14-10-112, separation is generally going to be considered binding, almost likened to a contract, particularly as relates to the division of property and debt, as well as to a waiver of alimony. Courts not only have, but maintain, the discretion to review and weigh in on provisions of a separation agreement tied into child support, spousal support, and child custody issues. They are also charged with assessing whether a property division agreement is fair and equitable to both parties.

In instances in which divorcing spouses rush to enter into a separation agreement, there are certain concepts to keep in mind which must be adhered to if they want their agreement to stand. Again, generally, the party with more to lose financially would be wise to do things correctly.

The first significant protocol to be followed is making sure that prior to the signing of the separation agreement, or even tendering it to the other party, full financial disclosures, pursuant to Colorado Rules of Civil Procedure Rule 16.2 (e)(2), have been provided. This includes not only a sworn financial statement, but also recent pay stubs, the last three years of income tax returns (personal and business), and current bank, debt, investment, and retirement account statements. Pursuant to fairly recent case law, the duty to provide these financial disclosures is mandatory and cannot be waived. If disclosures are not provided prior to signing, the other side can raise the issue with the court as a means of getting out of the agreement that might otherwise be binding. As a side note, it should also be noted that disclosures need to be accurate, particularly as to the bigger ticket items. Thus, if someone fails to disclose a bank or investment account, or materially understates the value, they are at risk of the other party reopening the case and unsettling the agreement, so long as such is done within 5 years of the divorce being completed. This can also be done before the decree of dissolution of marriage enters. The best course of action is to follow the rules of disclosure both substantively and from a timing standpoint.

The second area of concern related to making sure your separation agreement is binding ties in the substance of the agreement in terms of whether it is reasonable. Technically, the agreement must not be “unconscionable,” which, in essence, means grossly unfair. Case law supports the notion that spouses have a duty to negotiate fairly with each other and not engage in sharp dealing when settling the financial aspects of their divorce. To give an example, in a marriage in which there is a marital estate of $1,000,000, most courts would find it to be unconscionable if one spouse got $900,000 of the estate and the other gets $100,000. This is not to say that parties cannot enter into agreement which are not equal, or even close to equal as relates to division of marital property. However, when one party gets 90% of the marital estate, without some sort of other offset or logical basis, such an agreement may not survive a subsequent challenge by the other party or the court tied into being conscionable.

Prior to signing off on the decree, judges will go to varying lengths of scrutiny to review parties’ agreements, financial disclosures, etc. When there are two attorney’s involved, a court is less likely to scrutinize to the degree it will when there are one or two unrepresented spouses. Again, challenges to the agreement can be raised by either the court or a party. As such, in practice, it is better to follow the rules and to be able to justify any provisions which deviate too far from the norm. Thus, just rushing to get your spouse to sign a separation agreement as a means of saving both time and money may come to back fire down the road. When it come time to settling your divorce case it is advisable to first consult with a Denver family law attorney.