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California Court Holds Settlement Agreement Allowed for Increase in Support Obligation

If you intend to seek a divorce, it is essential that you retain an attorney who is knowledgeable in drafting settlement agreements, to avoid unknowingly agreeing to terms that may put you in an unfavorable position in the future. Even if an agreement seems appropriate under your current circumstances, it is important to consider how any change in circumstances could affect your obligations and rights under the agreement. The failure to properly allow for modifications in your favor in the future can result in an increase in financial obligations.

A California Court of Appeals recently held that a marital settlement agreement that required a substantial increase in a wife’s support obligation had to be followed despite a material change in circumstances.  If you wish to dissolve your marriage, it is in your best interest to consult a California divorce attorney as soon as possible, to assist you in seeking a settlement agreement that protects your rights now and in the future.

Facts Regarding the Marriage and Separation

Reportedly, husband and wife were married for over 18 years and had two children together. They separated in 2012 and in 2014 dissolved their marriage. A marriage settlement agreement (MSA) and post-judgment stipulation (PJS) were incorporated into the terms of the court’s order dissolving their marriage.  The MSA provided that the wife would pay the husband $850 in monthly spousal support, plus 10% of any income she earned per year in excess of $180,000. The MSA also provided that either party could petition the court to modify the spousal support, after which the court would be obligated to consider the income of the parties at the time of the separation. Additionally, the wife agreed to notify the husband if she changed jobs. The PJS subsequently reduced the amount of support payments owed by wife on a sliding scale.

Allegedly, in 2016 wife requested an order to modify her support obligations, on the basis that she obtained new employment with a much higher salary and eligibility for a bonus of up to 40% of her salary. The court found that when the MSA was drafted, husband was to receive a maximum of $990 in spousal support in addition to the monthly payments, but under wife’s new pay structure he was eligible to receive up to $19,100.  The court ruled this constituted a significant change in circumstances, and capped wife’s additional support obligations at $990 per year, regardless of her actual earnings. Husband appealed.

Material Change in Circumstances 

Under California law, a court may modify a support obligation if it finds a material change in circumstances, and an increase of a supporting spouse’s income can be a material change in circumstances. The court stated that although the MSA reflected an expectation that wife’s salary could increase, it did not imply that an increase in salary could not be considered a change in circumstances. Thus, as wife’s salary increased by almost fifty percent in one year, it strongly suggested a change in circumstances. As such, the court held that the trial court did not err in considering wife’s request for a modification of her support obligation.

Constraints of the Marital Settlement Agreement

The court noted, however, that any request for a modification had to comply with the terms of the MSA. The court held that the order imposed by the trial court failed to take into consideration the parties’ reasonable expectation that the wife’s salary would increase by capping the amount of the additional support obligation at 10% of her salary at the time the MSA was drafted. As such, the court found the trial court was outside of the constraints of the MSA. Therefore, the court reversed the trial court order and remanded for a new order to be issued.

Set Up a Consultation with a Skilled California Divorce Attorney

Determining what property constitutes marital property can be a challenging and contentious process. If you are in the process of considering whether to file for a divorce, you should meet with an experienced divorce attorney to discuss the facts of your case and help you develop a plan for seeking a settlement agreement that is in your best interest. Ethan M. Weisinger is a seasoned California divorce attorney with the knowledge and experience needed to help you obtain a favorable outcome.  You can contact Mr. Weisinger at 925-258-2020 or through our online form to schedule a meeting.

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