With marital settlement agreements, much like any other form of contract, even the smallest of details can become extremely important. A case recently decided by Florida’s First District Court of Appeal highlights this point. In a recent case, the court concluded that an ex-wife could receive a portion of the 2010 value of her ex-husband’s 401(k) and Army pension, even though the couple divorced in 1994. The court ruled that, if the couple did not intend the wife to share in the account’s gains or losses, the agreement should have awarded her a fixed amount, not a portion of the account.
This couple ended their 20-year marriage in 1994. The divorce decree incorporated the couple’s marital settlement agreement, which they reached three months earlier. That agreement stated that the wife received 10/23 of the husband’s Army pension and half of his 401(k) “as of July 24, 1993”. The agreement called for entry of QDROs (special court orders governing pension and retirement funds) regarding the accounts, but the couple delayed for several years.
The wife finally filed for entry of the QDROs in 2010. The trial court awarded the wife $18,111 from the 401(k) and $18,922, plus $401 per month, from the Army pension. The trial court calculated these amounts based upon the 1993 values of each account.
The 1st DCA disagreed with the trial court. The appeals court ruled last month that, if the couple wanted the wife to receive only the amount equal to one-half of the amount in the 401(k) in July 1993, they should have written the agreement to award her a fixed amount, not “half of the portfolio of investments.”
Alternately, they could have stipulated the wife received a portion of the account with the understanding that the value of the account was a particular dollar amount. In other words, the agreement should have awarded the wife “$18,111 from the husband’s 401(k)” or “one-half of the husband’s 401(k) account with a value of $36,222”, instead of simply “one-half of the husband’s 401(k)”.
Unfortunately for the husband, they did not. By failing to use either method that would identify a fixed dollar amount, the wife received a one-half interest in the account, subject to benefit from the gains (or suffer the losses) that account incurred over the years. The court compared it to an agreement giving a wife one-half ownership of a farm as part of a divorce settlement. Any date referenced in this hypothetical settlement agreement would only identify the farm and the amount of acreage, but would not prevent the wife from receiving her half of future profits should the farm increase in value.
Perhaps the most vital “take away” from the Graham case is the absolute importance of ensuring that your marital settlement agreement is drafted with utmost precision to make certain it says what you intend and you intend what it says. To guarantee your divorce agreement reflects the true agreement you reach with your spouse, talk to the South Florida family law attorneys of Sandy T. Fox, P.A. They have been providing skilled advice and representation for years to people throughout the Fort Lauderdale and Miami-Dade area going through divorce. Whether you believe your divorce settlement is simple or complex, it is always wise to work with trained, knowledgeable legal professionals who can help guide you through the process. Contact us online or by calling (800) 596-0579 to schedule your confidential consultation.
More Blog Posts:
Prenuptial Agreements: Important for Every Florida Marriage, Fort Lauderdale Divorce Lawyer Blog, June 6, 2013
World’s Most Expensive Divorce, Fort Lauderdale Divorce Lawyer Blog, May 15, 2013