This is the next post in a series of articles about understanding spousal support or alimony awards in Las Vegas, Nevada. My previous article discussed the impact of “underemployment” in a spousal support calculation and/or award. If one party has voluntarily reduced their income through underemployment for purposes of manipulating an alimony award, the court may use the person’s potential earnings as a basis for the support award. An experienced divorce attorney can explain how, through the discovery process, one may demonstrate underemployment to the court. This article will focus on how a settlement agreement, a common tool in resolving divorces, may affect alimony rights and obligations of the parties. If you need assistance, contact my office today to speak to a lawyer.
A settlement agreement is a binding contract between two parties in which they resolve all outstanding legal issues in a dispute. In the context of a divorce, this document will address issues such as the division of marital property, child custody and support, and ongoing spousal support obligations. In an uncontested divorce, the parties must agree on all of the issues and memorialize their agreement. In a contested divorce, a divorcing couple often engage in discussions, through their attorneys or through the litigation process, to attempt to reach a settlement. If they cannot agree, their case will proceed to trial, where a judge will control the outcome of the outstanding issues. For this reason, parties are encouraged by the court throughout the process to attempt to resolve their issues via a settlement agreement. It is not uncommon for parties to hastily agree to settlement terms to expedite the conclusion of the divorce process. It is important to understand, however, that a settlement agreement has a permanent impact on the parties’ rights and obligations. Before agreeing to any contractual language, it is essential to understand how those terms may impact you in the future.
For instance, Nevada law typically allows Las Vegas parties to seek a modification of alimony awards if either party experiences a significant change in circumstances. When a settlement agreement states that the spousal support agreement between the parties is non-modifiable, however, a court will generally enforce that term. Failing to understand this provision and its potential future consequences could have a disastrous financial impact. Consider, for example, a couple who have been married for 25 years, now seeking divorce when the wife is on the brink of retirement. She has a successful career and has agreed to pay her ex-husband significant spousal support based on her current salary for a period of 10 years, even though he is independently financially sound. The parties are eager to resolve the matter without incurring extensive legal fees. The wife, therefore, prepares a settlement agreement which includes a clause stating that the support obligation cannot be modified to finalize the terms. She understands that this is a less than favorable provision, but wants to expedite the process. The wife retires and two years into the alimony payments the stock market crashes and her portfolio is significantly reduced. A court may have seen this as a significant change in circumstances justifying a modification of the support award. Because the settlement agreement is non-modifiable, however, the wife cannot seek a reduction in her support obligation. She may have to return to work for purposes of continuing her payments.
Given the potential impact and permanence of a settlement agreement, it is important to retain a divorce attorney to prepare, negotiate and review a settlement agreement on your behalf. Your counsel will educate you about Nevada spousal support law and identify potential pitfalls in the proposed settlement terms. My firm has experience in divorces and settlement agreements. Contact my office today to speak with a Las Vegas lawyer.