Incorrect Dollar Amount in a Separation Agreement

Incorrect Dollar Amount in a Separation Agreement

Kmet v. Kmet, 8th Dist. Cuyahoga No. 107759, 2019-Ohio-2443 (June 20, 2019).

Issue: Can the trial court alter the premarital portion of a retirement account listed in a final Separation Agreement after it has been discovered said amount is incorrect?

Decision: The Eighth District Court of Appeals determined that the parties were bound by the dollar amount listed in the Separation Agreement as the premarital portion and the trial court could not amend said amount—even after it was discovered that the amount was inaccurate. In this case, Husband and Wife entered into a Separation Agreement that listed the parties’ date of marriage as September 26, 1996. Based upon that date, it was determined that the premarital portion of the Husband’s Thrift Savings Plan or “TSP” (a retirement savings and investment plan for federal employees and members of the uniformed services that is similar to a 401(k) plan) was $28,328.29. During the hearing, the Magistrate specifically asked if the $28,328.29 was the premarital portion of the TSP and the rest of the funds were marital property that were to be divided 50/50. The Wife’s attorney answered in the affirmative.

It was later discovered that the parties had used the wrong marriage date. The Husband and Wife were actually married on September 26, 1995—not 1996. As such, the parties amended the original Separation Agreement to reflect the correct marriage date. However, in the amended Separation Agreement, the parties still had the premarital portion of the Husband’s TSP listed as $28,328.29. After the Separation Agreement was revised and incorporated into a decree, the Wife had an amended QDRO drafted to reflect the correct date of marriage. When the QDRO was prepared, it was discovered that the premarital portion of the TSP account was less than $28,328.29. The Husband refused to sign the QDRO that reflected less premarital property. The parties litigated the matter and the Magistrate held that the amount of $28,328.29 was incorrect as it was based on the incorrect date of marriage and the parties should not be held to that amount. The trial court adopted the Magistrate’s decision.

The Husband appealed, claiming that through the original Separation Agreement, the amended Separation Agreement, and the Wife’s attorney’s representations before the Magistrate, the parties had clearly agreed that the premarital portion of his TSP account was $28,328.29. As such, it was improper for the trial court to alter this agreement. The Eighth District agreed with the Husband and reversed the trial court. It recognized that language in a divorce decree is to be interpreted just like any other contract and words in a contract should be given their “ordinary meaning.” Because the original and amended Separation Agreements explicitly listed the premarital portion of the Husband’s TSP as $28,328.29, the parties were bound by that amount. The trial court could not amend the premarital portion—even if that amount was wrong.

Observation: The language in a Separation Agreement is critical. The wrong language can cost your client hundreds, thousands, or even hundreds of thousands of dollars over a lifetime. In such circumstances, aside from the damage to your client, it is possible you could be on the hook for malpractice or, in the very least, your reputation could be harmed.

How we can help: Our team has decades of experience in dividing retirement assets at divorce. We can help you to correctly value the retirement assets, negotiate a settlement, draft the Separation Agreement, and/or draft the QDRO.

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