What is a Separation Agreement & Why Would You Need One?

The news of Bill Gates and Melinda Gates separating and divorcing certainly shocked the world this past month. It’s not every day that one of the world’s richest couples announces that they are going to divide their assets. Bill and Melinda Gates did not enter into a Pre-Nuptial Agreement (you can read more about Skufca Law’s analysis of Prenups here: https://skufcalaw.com/2020/06/15/being-productive-during-quarantine-crossing-a-prenup-off-your-to-do-list/) so they will need to divide their marital estate. It has been released that Bill and Melinda entered into a Separation Agreement.

But what exactly is a Separation Agreement?

In North Carolina, Separation Agreements can take many forms. A “pure” Separation Agreement would be an agreement that states that the parties agree to live separate and apart. A Separation and Property Settlement Agreement (“SAPSA” as they are commonly referred to) outlines that the parties agree to live separate and apart but also includes language regarding the division of some or all of the parties’ marital estate. The benefit of entering into a SAPSA is that it allows the parties to come to an agreement regarding the marital estate on their own terms. SAPSA’s allow for creative settlements that the Court will not usually order, and can also contain terms regarding child custody, child support, post separation support, alimony, and attorney’s fees. If you and your spouse are unable to come to an agreement, then any remaining claims would need to be resolved with a separate agreement at a later date or by going to Court and having a judge make a decision on any unresolved claims.

What makes a Separation Agreement valid?

To be a valid Separation Agreement, it must be in writing and it must not violate public policy. The parties must be separated or must be contemplating separation contemporaneous with the execution of the Agreement. One thing to consider with a Separation Agreement is whether you would want the agreement to ever be incorporated into any Court pleadings. Essentially, if you would like your agreement to remain private then you would want language placed in the agreement stating that it cannot be incorporated into any Court pleadings. Once the agreement is in a Court pleading the details of the agreement are available to the public. While North Carolina law does not apply to Bill and Melinda Gates, they probably do not want their Separation Agreement to be incorporated so that the public is not privy to the terms of their agreement. A Separation Agreement can be enforced if one party does not follow the agreement. Failure to pay alimony or child support, or failure to transfer property to the other spouse according to the agreement are examples where a claim for breach of contract may be brought against the party not following the agreement.

While you and your partner might not have the same assets as Bill and Melinda Gates, a Separation Agreement can be a valuable alternative to the time and expense of battling it out in Court and putting the outcome of your case in the hands of a judge.

If you’re recently separated or considering separation from your spouse, call the family law attorneys at Skufca Law at 704-376-3030 to discuss the benefits of having a separation agreement.