An individual going through a divorce must disclose a material change in facts during settlement negotiations, otherwise, it may invalidate a settlement provision. On May 11, 2017 the Appellate Division, Third Department invalidated a paragraph of a divorce settlement separation agreement. The court remanded the matter to address the proper equitable distribution of funds.
An individual going through a divorce must disclose a material change in facts during settlement negotiations, otherwise, it may invalidate a settlement provision. On May 11, 2017 the Appellate Division, Third Department invalidated a paragraph of a divorce settlement separation agreement. The court remanded the matter to address the proper equitable distribution of funds.
In June 2014, a wife filed for divorce. On September 15, 2015, the parties finalized a separation agreement that addressed equitable distribution as well as child support, custody, and spousal maintenance. A provision of the agreement addressed the wife’s ownership interest in a privately held company. The wife became employed by the company in 2012. In 2013, the wife was given unvested equity incentive units by her employer and in September 2015, half of her units became vested.
The part of the agreement that addressed this interest specified that she agreed to pay her husband 10% of the full value of the compensation received from these. Furthermore, the agreement stated that the wife would give the husband reasonable and necessary documents to value the ownership interest. After the signing of the agreement, the wife notified her husband that the company was sold and that she received 230,000 for her interest in the company and provided him with the 10%.
In accordance with Domestic Relations Law § 236[B][4][a], equitable distribution requires full financial disclosure by both parties. An individual has a statutory and contractual obligation to inform the other party of a sale prior to finalizing an agreement. Another portion of the agreement stated that the parties provided full disclosure of all financial assets, which is a continuing obligation. While the parties agreed to the language of the provision in the agreement in advance of September 15, 2015, the sale on September 1, 2015, rendered that provision moot because the value had been defined.
It can be overwhelming to navigate the divorce process. Seeking the guidance of an experienced New York divorce attorney is crucial to peacefully resolving potentially contentious issues. The divorce lawyers of Mcguire & Peláez, PC are sensitive to your needs, skilled in handling divorce and family court matters, and will fight zealously for your rights. For more information or to schedule a consultation, contact our Long Island divorce law office at (631) 348-1702.
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