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Episode 54 Transcript: Interim Agreements

In this episode, I wanted to talk a little bit about interim agreements, and I want to just start by explaining what those are. 

Interim agreements are contracts that you and your spouse make, I call them mini contracts, during the course of your divorce process before you have resolved all of the issues of your divorce. 

If you consider how long it takes to get divorced, it is not surprising that for many couples, at some point in their divorce process, there’s a particular issue or set of issues that become relevant, that are time-sensitive, and that one or both spouses want to have clear, legally binding understandings and obligations about, but they’re still not ready to resolve all the issues of their divorce. 

So they don’t have the option of addressing this mini-issue that’s come up in a comprehensive settlement agreement, and that’s where an interim agreement can come in. 

For instance, just a couple of the things that can come up during the process, at different phases of the process that one or both spouses might want to address would be one spouse is considering moving out of the marital residence but wants to have clarity about what their parenting schedule is going to be and establish that they’re not giving up any parental rights by moving out of the marital residence or giving up any rights to the home. That’s one thing that can come up. 

Or, as I talked about just a few episodes back, the spouses may decide that “Yes, on balance, we agree that we’re going to file jointly taxes for the prior tax year, but we want to address our responsibilities for this specific tax year now, before one of us is willing to sign on to that joint return.” Or maybe both people want an interim agreement about responsibility and entitlements to tax refunds and liabilities in an interim agreement before they file a joint return. 

A spouse could be deciding to start a new business and want to make clear that that totally new business that they’re starting during the divorce process is completely off the table for negotiating a division of or for treating as an asset to be divided in the divorce. 

Or maybe, God forbid, someone’s parent or relative passes away during the divorce process or is trying to do some advanced estate planning during the divorce process, and they want to be making gifts or an inheritance passes down during the process. 

Again, for something like that, spouses may say, “Listen. We still have a lot to work out on the parenting issues and on the financial front, but this particular issue we would like to just make clear how we’re going to handle.” 

Those are some examples of why you would want an interim agreement. The gist is that you have a time-sensitive issue that you want to make sure the two of you have clarified your rights and obligations around now, sooner rather than later. And it’s not the kind of issue that you’re comfortable just waiting to resolve until all the way at the end of your process in your comprehensive settlement agreement. That’s why you would want an interim agreement. 

But why might you notwant an interim agreement? 

Well, from a negotiation perspective, you can put yourself at a disadvantage if the subject matter of your interim agreement is something that you are agreeing to resolve in a way that benefits or a way that is satisfying to your spouse. 

In doing that in an interim agreement, you may be giving up a potential bargaining chip, for lack of a better phrase, in the bargaining and negotiation of all other issues that are going to be resolved in your comprehensive settlement agreement at the conclusion of your divorce negotiation.

For instance, you might be willing to agree to pay a certain temporary amount of support provided that you are ensured that you are going to have a 50/50 parenting schedule. Well, if you put the temporary amount of support in your interim agreement but you don’t have a guarantee on the parenting schedule in your interim agreement, and the support amount you’re agreeing to is quite beneficial to your spouse, you could be putting yourself at a slight disadvantage in the negotiation because you’re essentially agreeing to something that works for your spouse without ensuring that something that’s really important to you is also locked into the agreement. 

Another example might be that you might not want in an interim agreement to agree that you’re going to take responsibility for 100% of the process fees related to the divorce: the attorney’s fees, the mediator’s fees, financial neutral’s fees, whatever. You might not want to put that in an interim agreement, yet you may be thinking, “Yes, I think based on the disparities in our incomes and our wealth, I’m going to end up paying for the divorce process ,and I’m fine with that.” But probably implicit in your thinking is “I’m fine with that, provided that the substance of our ultimate agreement is something I’m okay with.” So, you would want to likely not agree to take on full responsibility for fees at the outset until you have some sense and some guarantee that the issues that are very important to you are being resolved in a satisfactory way.

And in fact, what often comes up, and we’ve spoken about this in past episodes about attorney’s fees, but what often comes up is the attorney’s fees need to be paid throughout the course of the process. And so what many people will do is sign an interim agreement saying, “Okay, this person or this account is going to pay for the fees of the process now. However, we are reserving the issue of how we assign responsibility, ultimate responsibility, for those fees to be negotiated as part of this process, or ultimately, if we can’t reach an agreement, to be determined by a court.” 

Rather than taking on the responsibility 100% for the fees, you can say at the outset, “I know the money is going to have to come from my bank account.” You can say that in an interim agreement, and you can use the interim agreement to also specify that, “But by paying this, I’m not agreeing that I’m 100% responsible. I’m reserving that issue. We are reserving that issue to be negotiated as part of our global negotiation that will result in a comprehensive settlement agreement.” 

If you decide that you are interested in doing an interim agreement on any given topic, who drafts that? 

Well, if you’re in mediation, certainly your mediator can draft it for you. You can also have either one of your consulting attorneys draft it for you and have it reviewed by your spouse’s consulting attorney. If you are not in mediation, then one of the attorneys will draft an initial draft of the interim agreement for you and then the other will review and edit it. 

You may be wondering, “Well, do we really need our mediator or our attorneys to draft the interim agreement for us? Can’t we just put it in an email, something in writing that we both sign, or a letter?” 

The issue with that is that unless you have an attorney draft for you, what you draft in an email or a letter, or even if you try to draft your own agreement, is likely not going to be legally enforceable, which is sort of the whole point of having an interim agreement. 

If you just want to have a mutual understanding between you and your spouse, go ahead and put it in an email or put it in a text or write a letter and sign it. What the interim agreement adds above and beyond that is not just that you have a mutual understanding between you, but that if either of you in the future says, “You know what? I kind of rethought it, and I’m going to go back on what I said on that point about… I know you started this new business just yesterday, and we’ve been separated for two years, but actually I do want a part of it.” 

If and when that person has a change of heart, if you have an enforceable interim agreement, they really can’t go back on what they said. They’re obligated to stick to what they said, unless your agreement says otherwise, unless your agreement has, for instance, like a sunset date where it’s only valid until a certain date and then it ends, which is a little bit uncommon. 

But, without getting too much into the weeds, the whole point of an interim agreement is that it goes beyond just mutual understanding, and it actually obligates you to those terms. And so for that, you do want to have some legal professional or your mediator, if he or she is an attorney, or one of your attorneys be drafting that document. 

That was a very brief summary of interim agreements and the role that they can play in your divorce process. I hope it was helpful for you.

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