Yes, although that may seem odd. Most of us have signed a contract pretty early in life, such as for a first apartment or car. However, the concept may seem disconnected to marriage and divorce (certainly parties will sign a mortgage or have a credit card that is governed by the terms of the contract, but this has nothing to do specifically with getting married or divorce). That said, contracts play an increasingly important role in getting married and divorced. This blog provides you with the basics of marriage1 and divorce2 contracts.
In anticipation of marriage, the parties may enter into a prenuptial agreement to determine how their assets will be divided in the event of a divorce.3 The key to enforcing a prenuptial at the time of the divorce is what you did when you entered into the premarital agreement. The basics require the parties to disclose their assets in advance of the marriage, have sufficient time to review and consider a premarital agreement before the time of the marriage, and the right to have counsel advise the bride or groom. If so, it is very likely that upon divorce, the court will enforce the agreement and divide the property as specified in the premarital agreement. This is even if the premarital agreement does not comport with the law the judge would be bound by, such as presumably dividing the marital estate 50/50 (assets minus liabilities and divide by two). The parties have a contractual ability under the Indiana constitution to enter into an unfair agreement.
However, a premarital agreement cannot in any way dictate what custody, parenting time, and child support will be. Children are off limits in a prenuptial. This is the sole job for the fact-finder (judge). The reason for this is the parties cannot know what is in a child’s best interests to contract for it. In addition, the child’s best interests may change over time and the parties are free to seek a modification through the courts. In the final analysis, having a provision for custody in a premarital agreement violates public policy and could in theory void the entire premarital agreement.
Presupposing there is not a premarital agreement,4 most courts order parties to go to mediation to attempt to settle their case. A significant number of cases settle in mediation too. The benefit of mediation is the parties reach agreement on their own terms versus leaving it to a judge to decide. As with pre-marital agreements, any agreement is in writing and is called a Marital Settlement Agreement (“MSA”). This, like the prenuptial, is a contract. As with a pre-marital agreement, the parties are free to contract to terms a trial court could not order under the Divorce Act.
What is interesting, is unlike a pre-marital agreement, the parties in settlement negotiations or mediation can contract for custody, parenting time, and child support issues so long as it is in the children’s best interests and the court, upon reviewing the Marital Settlement Agreement, agrees. Ordinarily, the judges do sign off on an MSA addressing child-related issues because the children’s needs are considered and agreed to at the time of the divorce, not years earlier when the parties may not have had children at the time the premarital agreement was reached.
Lastly, when it comes to reaching an MSA, and what causes confusion for many litigants, is a trial court judge cannot enforce or set aside other existing contracts between the parties, such as a mortgage on a house. This is because the bank is not a third party in the litigation. All a court can do is order one spouse to pay a certain debt. However if they do not, contempt is about the only remedy, but even a contempt action still does not relieve either spouse from the obligation, unless it is discharged in bankruptcy.
The takeaway is the parties can plan for a divorce and how their assets will be divided in advance by a premarital. The parties can agree to most all matters in an MSA—and to some extent what is in the children’s best interest—although the trial court judge can also reject an MSA where it does not meet the children’s best interests. This is rare. Finally, a trial court judge cannot undo any contract the litigants have with a third party. Ultimately, contracts play an important role in divorce cases as they do in most other facets of life. Dixon & Moseley, P.C. advocates handle premarital agreements and litigation of divorce case across Indiana. This blog is written for general educational purposes only and is not intended to be legal advice or a solicitation for services. It is an advertisement.