Estate Planning for the Practicing Accountant Webinar – September 12
Legal Malpractice Tip: College Provisions in Property Settlement Agreements
Attorneys practicing family law, and specifically divorce, are familiar with property and marital settlement agreements. Agreements which specifically state that they are to be incorporated but not merged with a divorce decree remain a contract subject to laws applicable to contracts.
Property settlement agreements require the same, if not more, care and attention as other contracts during the negotiation and drafting process. Unfortunately, the interpretation and effect of property settlement agreements is often complicated by careless drafting or the attorney’s failure to test certain provisions against hypothetical future applications. This leads to unhappy clients who look to hold the attorney responsible for their frustrated expectations.
Provisions regarding obligations to pay the children’s college expenses can be particularly thorny. Divorces often occur when the children are young and the thought that they will attend college remains a hope. The parents are in no position to guess where the child will attend. Will it be a state school? A private school? What is a state school? Will the child live on or off campus? What if the child defers college until sometime after graduating high school? Side note: it is important to remind your client that, absent an agreement, there is no legal requirement that a parent pay for the child’s college.
Some attorneys attempt to avoid specific obligations by using vague phrases like, “The parties agree to help the children pay for college…” or “The parties agree that they will support the children’s effort and contribute, however, only as they are financially able to do so with no absolute obligation…” The latter was language at issue in Dayhoff v. Constable, 2014 WL 10917068 (Pa. Super. 2014) (not a legal malpractice case). In Dayhoff, the Court found that the parties’ agreement was enforceable despite the fact that the parties agreed that the obligation was not absolute. The Court next considered the parties’ relative financial situations in order to determine each parties’ obligation. Accordingly, even provisions carefully crafted to avoid a concrete obligation can be disregarded.
In the same vein as Dayhoff, the parties in Tuzzato v. Tuzzato, 2015 WL 6550755 (Pa. Super. 2015) (not a legal malpractice case) disagreed over the parties’ college tuition obligations. There, the parties agreed to pay fifty percent of the children’s education expenses for a four-year college program at a “state institution, such as Shippensburg, and not a private school.” A problem arose when the child began attending Pennsylvania State University’s Main Campus. Father argued that Penn State was a private institution and that his obligation was limited to “state institutions”, like Shippensburg, which were members of PASSHE. The Court disagreed and found that “state institution” could include “state related” institutions such as Penn State. The Court then considered extrinsic evidence and held that Penn State was a “state institution” pursuant to the parties’ agreement.
The lesson we can learn from these cases is to slow down when drafting property settlement agreements. Walk through some of the more complicated or speculative provisions with your client. If you think there might be problems interpreting the provision in the future regardless of how well you draft it, put this in writing and advise your client. Let your client make the decision whether to keep the provision or not.
Paul Fellman
Attorney at Law
Gibson & Perkins, P.C.
100 West Sixth Street, Suite 204
Media, PA 19063
610.565.1708 ext. 106
pfellman@gibperk.com
Related posts
