Guiding You Through the Separation Agreement

This guide may assist in answering questions you may have regarding Separation Agreements.  We encourage you to ask other questions, as it is impossible to answer all of your questions in this guide.

What is a Separation Agreement?  

A Separation Agreement is a written agreement that serves as a private contract between you and your spouse which may resolve matters such as proeprty division, debts, child custody and support, and spousal support.

Is a Separation Agreement required?

No.  North Carolina law does not require separating spouses to have a Separation Agreement.  However, having a Separation Agreement is a helpful tool and a wise choice if matters of children, support, debts, and property are involved.

Why do I need a Separation Agreement?

A Separation Agreement determines both you and your spouse’s respective rights and obligations.  It may also assist in making the separation process less expensive and hostile if certain issues can be agreed upon prior to separation.  After separation, the existence of an agreement can affect issues such as your income filing status, the inclusion or deductibility of alimony for income tax purposes, and your rights to inherit property from your spouse.

Who Drafts a Separation Agreement?

A Separation Agreement is an important and complex document that can have lasting and serious affects.  It is best to have your attorney prepare such a document for you.  Aside from making sure the legal formalities of the agreement are met, your lawyer is your advisor and protector and will guide you through negotiations and advise you as to how best to provide security for yourself and your children.

Can Both my Spouse and I Use the Same Attorney in Drafting the Separation Agreement?

It is wise for you and your spouse to have separate attorneys.  In doing so, you can be assured that you are receiving independent legal advice tailored to your unique situation from a lawyer who does not have a conflict of interest in trying to represent two parties with different goals and needs.  We will prepare a Separation Agreement on behalf of you.

Is My Spouse Required to Sign a Separation Agreement? Am I Required to Sign a Separation Agreement?

No.  The very nature of a Separation Agreement is that it is entered into voluntarily by both parties.   You cannot compel your spouse, and your spouse cannot compel you, to sign such an agreement or to agree to certain terms.  Both parties must sign voluntarily, and your signatures must be notarized.

What Issues Can a Separation Agreement Address?

A Separation Agreement can cover everything from child custody and support to property distribution to payments of debts to payment of college expenses.  Separation Agreements can create both temporary and permanent resolutions.  The scope of such an agreement is really up to the willingness of the parties, the creativity of your lawyers, and the needs of the parties.

Can Property be Divided in a Separation Agreement?

Yes.  A division of property can be provided for in your Separation Agreement.  This agreement will be binding on both you and your spouse.  You may divide your real property (for example, your land and buildings on it), tangible property (cars, furniture, jewelry, etc.) and intangible personal property (such as your bank accounts, life insurance, vested pensions).

In North Carolina, there is a strong presumption that all marital property (property acquired during the marriage, with certain exceptions) is divided 50-50. Other divisions, however, are certainly legal if the parties agree that the division is fair and equitable.

Marital property is generally considered any property acquired during the marriage; however, there are certain exceptions.  These exceptions include "separate property" (property acquired by either party before their marriage or property acquired anytime by gift or inheritance).  Title to the property is not the determining factor in what is separate and what is marital property.  Rather, the time when the asset was acquired (ie: before or during marriage) and how it was acquired (using marital funds or separate funds, or by gift or inheritance) is used to make this determination.

Can our Agreement Decide Who Claims the Tax Exemption for Our Children?

Yes.  Parties may agree as to who can claim the child(ren) as exemptions for income tax purposes.  Without a written agreement stating otherwise, the party with physical custody for more than half the year will get the exemption.

 Factors to consider in deciding who will claim the exemption:

• Trading the dependency exemption to non-custodial parent for an increase in child support
• Alternating the tax exemption between parents
• Conditioning the transfer of the exemption to non-custodial parent on his/her regular and full payment of child support

Can We Provide for College Education for our Children in a Separation Agreement?

A court cannot order you or your spouse to pay child support for your child in college; however, you may make provision for college expenses in your Separation Agreement.  Doing so will make it a binding, enforceable contract between you and your spouse which the court can require each of you to perform. 

Things to consider for inclusion: 

• How long should the obligation last?  An endpoint should be agreed upon.
• What costs will be covered? Housing, books, tuition and fees, monthly spending allowance, etc?
• What are your spending limits?  Private or public university? Be sure to set a specific amount or percentage, not just a "reasonable share."
• Any other terms you want to impose, such as: Requiring full-time vs. part-time study,  Maintaining a certain grade-point average,  In pursuit of a generally recognizable degree

Should Alimony be Included in Our Separation Agreement?

Alimony is spousal support; it is money paid by one spouse to the other to help with support, maintenance and living expenses.  It is not the same as child support.  If you and your spouse have agreed upon an amount of alimony, you should definitely include it in your Separation Agreement.  If you and your spouse have agreed that no alimony will be paid, this too should be clearly stated in your agreement. 

Can Increase in Marital Property After Separation be Divided in Our Separation Agreement?

It depends.  "Passive" appreciation or depreciation of property is "divisible property" and should be divided between spouses.  An example of this would be your house increase in value simply because of market growth.

Are Pensions and Retirement Benefits Divisible?

Even if not vested, pensions and retirement benefits acquired during the marriage are marital property and are divisible.  These can often be very valuable assets and should certainly be considered when contemplating your Separation Agreement.  If there is to be no division, the agreement should so specify.   If you are deferring a decision on division, this too should also be clearly stated in your agreement.

Should We Divide Debts in Our Separation Agreement?

Determining which spouse pays which debt should be clearly set out in your agreement.  In listing debts, it is important to include the (1) creditor’s name, (2) account number, (3) purpose of debt, (4) approximate balance, and (5) monthly payment amount. 

Providing for debt responsibility in your agreement will not stop creditors from suing both you and your spouse if payments are not made on debt obligations in both your names; however, it will allow you to ask the court to hold your spouse accountable and to reimburse you for any payments you have made for any debts which your spouse has been made responsible for by your agreement.

How Should We Divide our Debts?

There is no set formula for dividing your debts.  Often it is wise to have the spouse with the greatest incentive for making sure the debt is paid be responsible for that debt.  However, there are many options for dividing debts, and your attorney can best advise you in dividing debts in a way that is tailored to your individual situation.

Should We Provide for How We File for Taxes in Our Agreement?

Absolutely.  Providing for how you and your spouse file taxes can save both of you a lot of money in taxes if properly prepared.  You may continue to file jointly up until the year you are divorced and divide the refund or liability for taxes in a specified manner, such as dividing it depending upon both parties’ incomes.

How are Separation Agreements Enforced?

A Separation Agreement is a written agreement that serves as a private contract between you and your spouse.  If you spouse violates the terms of the Separation Agreement, you may sue him/her for Breach of Contract, unless the agreement has been incorporated as part of a court order. 

Making the Separation Agreement Part of a Court Order

Contempt of Court is failure to obey a court order without legal justification.  It is not Contempt of Court to violate a Separation Agreement unless the agreement has been made a part of a court order. 

Is a Court Bound by the Terms of Our Separation Agreement Regarding Our Child(ren)?

No.  Terms relating to child support, child custody, and visitation can always be modified by the court in the best interest of the child(ren).  In the absence of proof to the contrary, there is a presumption that terms concerning your child(ren) in your agreement are fair, reasonable, and necessary for the best interest and welfare of your child(ren). 

Can the Court Modify Terms of Our Agreement Concerning Me and My Spouse?

Terms pertaining to adults cannot be modified by the court except in very limited circumstances.  For example, if your court order is incorporated into a court decree, then the court has the power to modify the alimony based on a substantial change in circumstances.  Also, a court can overturn an agreement if it was entered into due to fraud, coercion, ignorance, or lack of mental capacity. 

Will my Separation Agreement Stop my Spouse from Harassing Me?

Most Separation Agreements have a non-harassment clause in them.  If the problem is one of physical violence, a court order will serve you better than a Separation Agreement and can be used to punish your spouse for violating the order.  With only an agreement, your only remedy is a lawsuit for breach of contract for breaking the promise of not harassing you.