Contract Interpretation of Vague Terms of a Stipulation of Settlement in a New York Divorce

It is no secret that going through a New York divorce can be a difficult and trying time. However, it does not necessarily have to be. In some cases, in which a couple agrees that it is time to go their separate ways and can also agree to work together in negotiating the details of the divorce, it may be possible to complete a stipulation of settlement.

A stipulation of settlement is a document that is filed with a family court that includes all the terms of a New York divorce. A properly drafted New York stipulation of settlement includes all aspects of a New York divorce, including: property division, child custody and support, and future costs for the couple’s children, such as college tuition. Not only will the document cover these items, it should also outline what is important to each party, so in the event an unanticipated concern later arises the parties can refer to the document to resolve the issue.

In order to be a legally binding document, the stipulation must be written in a specific manner and contain certain language. Otherwise, points that a party thought were already negotiated and agreed upon may later turn out to be unanticipated impediments.

When Is a Stipulation of Settlement Agreement Enforceable?

As noted above, when an issue is covered by a valid stipulation of settlement, that agreement will be binding so long as the document is incorporated into the divorce proceeding. Under New York case law, this is even the case when the document is not merged into the judgment of divorce because “a stipulation of settlement which is incorporated but not merged into a judgment of divorce is a contract subject to principles of contract construction and interpretation.” This means that the stipulation of settlement may be used by the judge to determine ancillary issues not necessarily covered in the document itself. Keeping in mind, that if the issue is covered in the document — even if the document is not merged into the final divorce proceeding — the document will be binding regarding that issue.

However, in the event that an issue is not covered under a stipulation of settlement, it may be subject to judicial determination. For example, in one case, the parties entered a stipulation of settlement stating that all bank accounts had been “split to the mutual satisfaction of the parties” and that no further judicial adjustments were necessary. It also stated that all of the parties would split 50/50 the costs of their children’s college expenses.

When it came time to pay for one of their child’s college, the former wife attempted to use funds in her child’s 529 plan – which she technically owned, but that was set up during the marriage – to pay for her share of the child’s college. The court rejected the former wife’s interpretation, noting that the 529 account was not a “bank account” and that it was otherwise unmentioned in the stipulation of settlement. Thus, the court made the determination that the former wife should apply the funds in the 529 account to the balance of college tuition, and then both the former husband and former wife would split the remaining balance.

Are You Going Through a New York Divorce?

If you are currently going through a New York divorce, or are considering filing for divorce or separation, contact the Law and Mediation Offices of Darren M. Shapiro. Attorney Shapiro has decades of experience handling a variety of complex New York family law matters, including New York divorces. Attorney Shapiro also has extensive experience mediating New York divorces and drafting stipulation of settlement agreements that may ease the tensions for his clients for years to come. To learn how Attorney Shapiro can help you, call 516-333-6555 to schedule a consultation today.

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