Separation Agreements

Introduction

A separation agreement is a document that may be drawn up and executed by the parties to a marriage, where that marriage has broken down, and where they do not wish to have recourse to the courts for the purpose of agreeing the terms of the breakdown. Usually, any deed of separation will contain a clause agreeing to live apart, and will thereafter make provision for custody, access to children, maintenance, division of matrimonial property, reference to Succession Act rights, and, if necessary, may contain a non-molestation clause. The terms will be committed to writing and signed by both parties.

Parties wishing to do so may negotiate the terms of a separation agreement with the assistance of either a mediator or a solicitor representing each spouse independently. Sections 5 and 6 of the Judicial Separation and Family Law Reform Act,1989 oblige the solicitor acting for an applicant or a respondent, prior to instituting or defending judicial separation proceedings, to:

(a)   discuss with the client the possibility of reconciliation and supply the names and addresses of persons qualified to help effect a reconciliation;

(b)  discuss the possibility of engaging in mediation to help effect a separation on an agreed basis and supply the names and addresses of persons qualified to provide a mediation service; and

(c)   discuss the possibility of effecting a separation by way of a separation deed or written agreement.

Similar provisions are contained in the Family Law (Divorce) Act, 1996, ss 5 and 6 in relation to divorce proceedings.

The contents/Terms of a deed of separation are obviously important, and the issue of enforcement of its terms is also important.

Terms of a Separation Agreement

A fundamental provision of every separation agreement is an agreement that the parties will live apart, thereby releasing spouses from the duty of cohabiting with one another. It is prudent for the separation agreement to outline the date on which the parties began living apart, so that this will be clear in the event of either spouse wishing to obtain a divorce.

It is also common to incorporate what is referred to as a 'non-molestation clause' in a deed of separation. This is generally a term that neither spouse will 'molest, annoy, disturb or interfere with the other'. Any breach of the non-molestation clause must be dealt with by an application for injunctive relief, or, where the behaviour which has breached the molestation clause demands further action, application may be made to the court pursuant to the provisions of the Domestic Violence Act, 1996 or the Domestic Violence (Amend­ment) Act, 2002.

Guardianship and Custody of the Children

In circumstances where there are children under the age of eighteen years, all arrange­ments regarding the children may be detailed in the deed of separation. It should be noted that married spouses remain joint guardians of their children. The issue of custody is usually referred to in the separation agreement, whether sole custody to one party or another, or joint custody to both spouses. The issue of access, and detailed arrangements for access may also be set out. Where the parties have managed to separate in a relatively amicable fashion, the agreement may deal with the issue of access by including a clause which refers to the taking into account of the wishes of the children, and which also refers to access taking place at 'dates and times to be agreed between the parties'. It is prudent, within the confines of this particular clause, to refer to the issue of passports for the children, and the agreement may detail the fact that passports are to be obtained for the children and by whom those passports shall be held. The issue of travel abroad or removal of the children from the jurisdiction may also be dealt with in this clause.

Maintenance

Maintenance which is to be paid by one spouse to another, or by one spouse in respect of dependent family members, can be detailed in a clause set out in this regard. The amount of maintenance to be paid will usually have been agreed in prior negotiations. Reference should also be made to the duration of time during which maintenance is to be paid, and also how the maintenance is to be paid, for example, whether it is to be paid weekly, or through the District Court Office. If maintenance is to be paid through the District Court Clerk's Office, the agreement should be made a rule of court pursuant to the Family Law (Maintenance of Spouses and Children) Act, 1976, s 8. It is also usual to include a clause in relation to variation of maintenance in the future, for example, by keeping the amount payable in line with the Consumer Price Index. The execution of a separation agreement does not preclude a spouse having recourse to court by seeking a maintenance order under the Family Law (Maintenance of Spouses and Children) Act, 1976, but presumably, in those circumstances, the court would be requested by the paying spouse to take into account the terms of the separation agreement. This is an issue which frequently arises in the course of conducting negotiations on the terms of a separation agreement. While provisions set out in a separation agreement cannot exclude a court from hearing and determining an application for maintenance under the 1976 Act, the court will probably take account of the circumstances in which a clause was signed which precluded the spouse from seeking maintenance in the future. For example, where a spouse who signed a term confirming that he or she would not seek maintenance in the future, with the benefit of independent legal advice, the court may take the view, in the absence of a change of circumstances, that that spouse understood what he or she was signing and the circumstances in which he or she agreed not to seek maintenance in the future.

Property

The agreement of the parties in relation to matrimonial property may also be set out in the terms of the separation agreement, and will vary from case to case, depending on the circumstances concerned. Frequently, it is agreed between the parties that one of them will be permitted to remain in the family home, for example, until the younger child has reached the age of eighteen, whereupon the family home will be sold and the proceeds distributed between the parties in an agreed manner. In the alternative, the parties may agree that subject to the payment by one of them to the other of a lump sum, the receiving party will surrender the whole of his or her legal and beneficial interest in the family home, and the property will thereafter be transferred into the name of the paying spouse. It is also usual for separation agreements to contain a clause containing a general consent to the sale or other disposal of any interest in the family home at any future date for the purposes of the Family Home Protection Act, 1976. This will obviate the need for former spouses to contact one another for the purposes of the execution of Family Home Protection Act Declarations in the future.

In relation to other matrimonial assets, a separation agreement may specify, for example, what is to happen with the family business, and on what terms it is to be wound up, or indeed continued as a growing concern. All matrimonial property may be dealt with in the separation agreement.

Succession

The issue of succession rights may be referred to in an agreement by the inclusion of a clause by the spouses to renounce their respective rights under the Succession Act, 1965, to a share in the estate of the other. Any such renunciation will not prevent the parties making application to court if they seek a divorce for an order to have provision made out of the estate of the deceased spouse pursuant to the provisions of the Family Law (Divorce) Act, 1996, s 18(1). However, the 1996 Act, s 18(10) enables the court, on granting a decree of divorce or at any time thereafter, on the application of either of the spouses during the lifetime of the other, to make an order that the other spouse shall not be entitled to apply for an order under s 18. A relevant and instructive case is J.C.N. v R.T.N., 15 January 1999, High Court (unreported). It should be noted that a spouse who renounces his or her rights to succession in a separation agreement retains no right to apply for a share from the estate of the deceased spouse pursuant to the Family Law Act, 1995, s 15(a).

Pensions

There is no provision for agreeing an adjustment to a pension scheme of which either of the spouses is a member. For example, a separated spouse remains a widow(er) for the purposes of a 'contingent benefit' under a pension scheme. If it is felt that a pension adjustment order is required, then the terms of such an order may be agreed between the parties, and application made on consent for an ancillary order pursuant to a decree of judicial separation. In those circumstances, a separation agreement will not be executed.

Taxation

The issue of income tax is one which should also be dealt with in a separation agreement in the event that maintenance is being paid by one spouse to the other. The provisions of the Taxes Consolidation Act, 1997, ss 1025 and 1026 apply to maintenance payments, and direct that maintenance is to be deducted from the paying spouse's gross earnings prior to their being assessed for income tax. Because of this, the receiving spouse must then pay income tax in respect of the maintenance payments which he/she receives. In most circumstances, the spouses opt to be assessed as single persons for income tax reasons. However, pursuant to the Taxes Consolidation Act 1997, s. 1026, separated Spouses may elect for joint assessment, provided that they are resident in the State for income tax purposes, and also provided that legally enforceable maintenance payments are being made by one spouse to the other. An election for joint assessment must be made directly to the Revenue Commissioners in writing. This enables one of the parties to obtain the benefit of the full married person's tax allowance and double tax bands. All other aspects of taxation may also be agreed between the parties, and the terms incorporated in the agreement. It should be noted that maintenance which is specifically designated for the support of children is not taxable in the hands of the custodial parent to whom it is paid.

Indemnification

Finally, most separation agreements contain a detailed indemnification clause, which seeks to have the effect of indemnifying both spouses from all future debts which are incurred by either of them.

This is not an exhaustive list of the terms which may be incorporated in a separation agreement, but should rather be used a guide.

Separation Agreement Made a Rule of Court

It is possible to have an executed separation agreement made a rule of court, in either the Circuit or High Court, provided the agreement contains a provision relating to the payment of one spouse to the other of maintenance payments for his or her own benefit or           for the benefit of dependent family members, or a provision which governs the rights and liabilities of spouses in relation to the making or securing of payments or the disposition or use of any property.

If an agreement is made a rule of court, it affords to the spouse receiving maintenance payments the right to have that maintenance paid through the District Court Clerk, with consequent implications for the recovery of maintenance arrears. In addition, the ruling of the agreement also provides the recipient spouse with the remedy of contempt of court where breach of the agreement occurs.

However, if a maintenance agreement is comprised in a separation agreement which is then ruled pursuant to the Family Law (Maintenance of Spouses and Children) Act, 1976, s 8, recourse may not be had to court for the purpose of varying the maintenance terms, but simply for the purpose of payment and enforcement.

Separation Agreements and Future Proceedings

The most important judicial development in the law on separation agreements is the decision of the Supreme Court in P.O 'D. v A.0 'D. [1998] 1 ILRM 543. In this case the parties married in 1961 and the marriage broke down in 1969 due to the husband's alcoholism and loss of employment leading to indebtedness. In April 1969 the husband transferred the family home to his wife's sole name. A separation agreement was entered into between the parties on 16 January 1979. The agreement was in the usual form and there was a specific recital in the agreement recognising that the husband had paid all the mortgage instalments on the family home up until April 1969 and thereafter the wife had taken sole responsibility for the mortgage.

Keane J, delivering the judgment of the Supreme Court, stated that a separation agree­ment amounts in law to a binding contract and, as such, is a bar to subsequent proceedings for judicial separation under the Judicial Separation and Family Law Reform Act, 1989. Citing the dicta of Blayney J in F v F [1995] 2 IR 354, Keane J justified the bar, not only because the parties to a binding agreement should not be permitted to go behind it, but also because the parties, by agreeing to live separate and apart, had rendered superfluous the granting of a decree of judicial separation.

He stated:

'First, where the agreement provides, as it invariably does, that the parties are to live separate and apart, the granting of such a decree would be superfluous (excessive). Secondly, where parties have entered into a binding contract to dispose of differences that have arisen between them as husband and wife it would be unjust to allow one party unilaterally to repudiate that agreement irrespective of whether it took the form of a compromise of proceedings actually instituted.'

The above passage should be brought to the notice of all parties in negotiating the terms of a separation agreement as a spouse precluded from seeking a decree of judicial separation cannot seek the extensive range of financial and property reliefs available under Part II of the Family Law Act, 1995 (which repealed Part II of the 1989 Act). In particular, the obtaining of a judicial separation decree is an essential prerequisite to invoking the court's jurisdiction to grant a pension adjustment order.

It should be noted that a separation agreement cannot act as a bar to a spouse either instituting maintenance proceedings under the Family Law (Maintenance of Spouses and Children) Act 1976 (see H.D. v PD., 8 May 1978, Supreme Court (unreported) and the dicta of Denham J in F v F [1995] 2 IR 354), or bringing proceedings under the Guardianship of Infants Act, 1964 to vary guardianship, custody or access arrangements previously agreed.

Separation Agreements and Divorce

A separation agreement does not act as a bar to divorce proceedings under the 1996 Act since s 20(3) of that Act merely requires the court, in determining what provision should be made for spouses and dependent children in divorce proceedings, to have regard to the terms of any separation agreement which has been entered into by the spouses and is still in force.

A relevant and instructive case is T v T, 14 October 2002, Supreme Court (unreported). The parties had been married for twenty-two years. There were three children of the marriage. The parties had 'separated' in 1994, at which time the applicant (husband) had transferred 30 per cent of his then wealth to the respondent (wife). The applicant was involved in another relationship and there was one child of that relationship. He argued that cognisance should be taken of the fact that 80 per cent of his assets had been acquired after the date of separation and that he now had additional responsibilities and dependants to consider. The Supreme Court upheld a decision of the High Court in which Lavan J awarded the respondent a lump sum of £5 million (€6.35 million), in three instalments, together with maintenance in the sum of £800 per month for the youngest dependent child of the marriage. (The applicant's wealth was then estimated to be not less than 14 million pounds (€17.78 million)). The Supreme Court held that assets were to be assessed as at the date of the divorce, though the terms of a separation agreement and the fact that the assets were acquired post separation were factors to be taken into account by the court when reordering the assets on divorce.

In the recent decision of K v K High Court, O'Neill J, 24 January, 2003, (unreported) the High Court held that in complying with s 20(3) of the Family Law (Divorce) Act, 1996 (that the court is required to 'have regard' to the terms of a separation agreement), it must also examine the separation agreement to ensure that at the time of the divorce application, such provision as the courts thought proper existed or would be made for dependent spouses or members of the family concerned.

In K v K the parties separated in 1979. They subsequently entered into a deed of separation in 1982. The applicant (wife) commenced an application for divorce in 1998. The financial fortunes of the parties by the date of the divorce application were sig­nificantly different to that when they separated. The High Court had to decide what amounted to 'proper provision' at the date of the divorce. O'Neill J held that the terms of the 1982 separation agreement fell short of what amounted to proper provision for the applicant and he transferred to her €511,000, which represented approximately one third of the respondent's joint share of the assets. The learned judge placed particular reliance on the Supreme Court decision in T v T Supreme Court, October 14, 2002 (unreported).

The foregoing case should be distinguished from a case where there is a recent separation deed in force. In such circumstances, where there is no significant change in the fortunes of the parties, the requirements of 'proper provision' are likely to be met without a significant reordering of the assets on divorce.

Please contact us should you wish to discuss a family law matter.