On February 9, 2021, the Virginia Court of Appeals issued the decision of Lisa J. Wills v. W. Neil Wills. Let's take a closer look at the case to see why the Virginia Court of Appeals ruled like it did.
In this case, Husband and wife were married on December 11, 2004, in Arlington, Virginia. They had one child, who was still a minor at the time of the circuit court proceedings. Husband and wife last separated on July 13, 2015, after which there was no reconciliation. On August 25, 2016,husband filed a complaint for divorce based on the parties’ having been separated for more than one year. The complaint requested that the court affirm, ratify, and incorporate into a court order the agreement entitled “Postnuptial Agreement” that was signed by the parties on January 8, 2005. Wife filed an answer stating that the parties had separated and reconciled on several occasions following the signing of the Postnuptial Agreement and asking the court to find that the agreement was abrogated by one of these subsequent reconciliations pursuant to Code § 20-155.
The circuit court found that the agreement was abrogated by Code § 20-155 when the parties separated and then reconciled on
one or more occasions following the signing of the agreement. Examining Code § 20-155, the trial judge stated, “Married persons, whether happily married or separated, may enter into an agreement to settle their respective property rights should the marriage subsequently dissolve, and should they separate or remain separated and then reconcile after signing the agreement, the agreement is abrogated unless the writing otherwise provides.” Thus, the circuit court essentially concluded that it was irrelevant whether the agreement was entered into with the intent to separate or with the intent to remain married.
The husband appealed and contends that the circuit court erred in ruling that the Postnuptial Agreement was abrogated based on the parties’ separating and reconciling subsequent to their signing the agreement. Husband argues that the last sentence of Code § 20-155 does not apply to the parties’ Postnuptial Agreement because that sentence applies only to separation agreements
and property settlement agreements, which he defines as “agreements entered into while separated or as an incident of separating with an intent of either indefinite separation or future divorce.” He argues that, because the parties signed the Postnuptial Agreement with the intent to remain married, the Postnuptial Agreement is not affected by the last sentence of Code § 20-155.
The circuit court in this case applied the last sentence of Code § 20-155 to all marital agreements settling property rights. However, that interpretation is inconsistent with the statute’s plain language. The first sentence of Code § 20-155 permits married persons to enter into the same types of agreements as parties intending to marry. See Code §§ 20-147 through 20-154 (governing premarital agreements). The second sentence of Code § 20-155 also addresses “marital agreements,” explaining an alternate manner in which “such agreement[s]” may be executed. The final sentence of Code § 20-155, however, does not use the words “marital
agreements” or refer back to “marital agreements” by using the words “such agreement[s].” Instead, in the last sentence of Code § 20-155, the General Assembly used the terms “separation or property settlement agreement.”
Having concluded that the last sentence of Code § 20-155 applies only to “separation or property settlement agreement[s],” the next question before the Court was whether the Postnuptial Agreement at issue in this case was a “marital agreement” or both a “marital agreement” and “a separation or property settlement agreement.” If the agreement falls only within the former category, then it was not affected by the last sentence of Code § 20-155 and not abrogated by one of the parties’ subsequent reconciliations. If the agreement was both a “marital agreement” and “a separation or property settlement agreement,” then the agreement was abrogated by one of the
parties’ subsequent reconciliations.
In order to determine what type of agreement the parties signed, we look to the agreement itself. When the parties set out the terms of their agreement in a clear and explicit writing then such writing is the sole memorial of the contract and . . . the sole evidence of the agreement. The agreement is entitled “Postnuptial Agreement,” and it recites that the parties were married on December 11, 2004. It states that “each party is aware of the fact that by virtue of their marriage, each shall or may acquire certain rights in the property of the other, either during their mutual lives or upon the death of either party” and that they “desire by this agreement to settle and determine their respective property rights and all other rights and demands arising out of the marriage relationship.” The agreement contains various provisions governing how the parties will act during the marriage and how those obligations will change in the event of a divorce or separation.
For example, it provides that husband will name wife as the primary beneficiary in his will “so long as the parties are neither separated nor divorced.” It provides that both parties waive their rights to spousal support but requires husband to pay wife $5,000 per full
year for the first five years of their marriage and then $10,000 per full year for the next five years of their marriage for a maximum payment of $75,000. It also requires husband to pay wife $2,000 per full year of marriage into a retirement account of her choosing until she turns sixty, unless the parties separate, in which event the payments will be terminated.
The agreement requires husband to maintain a life insurance policy on himself with wife as the beneficiary that will remain “in full force and effect so long as the parties are not separated.” It also provides that the division of property shall be in accordance with the Postnuptial Agreement “[i]n the event of separation, divorce, or death.
Certainly, the Postnuptial Agreement at issue is a “marital agreement” as it was an agreement between married people “settling the rights and obligations of either or both of them” regarding matters upon which Code §§ 20-155 and 20-150 specifically permit them to contract. See Code § 20-150 (enumerating subjects permissible in premarital contracts). It is also clear that the agreement is not a separation agreement as the terms of the agreement anticipate a continuing marriage, including requiring husband to make yearly payments to wife during the marriage. Although the Postnuptial Agreement addresses the parties’ rights and obligations in
the event of a divorce or separation, those potential events are treated as contingencies – not imminent likelihoods. Therefore, because the agreement is not a separation agreement, the remaining question is whether the agreement is a “property settlement agreement.”
In Virginia, spouses in the process of separating often enter into agreements that they entitle “property settlement agreements” in order to settle any obligations between them relating to property and support.
See 24A Am. Jur. 2d Divorce and Separation § 972 (“If spouses, upon their separation or impending divorce, create a contract that, considered as a whole, evidences that the parties intended it to be a final settlement of all obligations between them concerning
their property of any kind, courts consider it to be a property settlement agreement.” (emphasis added)). While no Virginia appellate court has expressly stated that a property settlement agreement refers only to an agreement made in connection with the dissolution of a marriage, the Supreme Court has strongly suggested that it was the legislature’s intention in drafting the last sentence of Code § 20-155 for agreements signed during separation proceedings to be abrogated when the legislature chose to use the term “property settlement agreement.” In Flanary v.Milton, 263 Va. 20, 23 (2002), the Supreme Court stated that “the 1998 amendment to Code
§ 20-155 [which added the final sentence to the statute] anticipates agreements made during proceedings for dissolution of a marriage, by providing that a signed separation or property settlement agreement is abrogated if the parties reconcile unless otherwise specifically provided in the agreement.” (Emphasis added). The Supreme Court’s interpretation comports with the
plain language of the statute as it accounts for the General Assembly’s decision to use the words “separation or property settlement agreement” – rather than “marital agreement” – in the statute’s final sentence. Therefore, we hold that only separation and property settlement agreements, which are marital agreements made in connection with the dissolution of a marriage
or a separation, are abrogated by a reconciliation between the parties.
Turning to the agreement at issue, we conclude that the Postnuptial Agreement at issue here was not a “property settlement agreement” as that term is used in Code § 20-155. The agreement was signed less than a month after the parties were married with the intent that their marriage continue. The terms of the Postnuptial Agreement show that it was intended to provide the parties with the same rights and obligations as a premarital agreement, which Code § 20-155 expressly permits. The agreement was not made in connection with the dissolution of the marriage or a separation. Consequently, the last sentence of Code § 20-155 does not apply to
this Postnuptial Agreement, and the agreement was not abrogated by one of the parties’ later separations and reconciliations. Accordingly, we reverse the circuit court and remand the case for proceedings consistent with this opinion, given that the Postnuptial Agreement at issue here was still in effect – not abrogated – at the time of the divorce.
If you are considering a prenuptial agreement, postnuptial agreement, or a separation or property settlement agreement, consult with an experienced domestic relations attorney in your area.
-Rob Hagy, Charlottesville Divorce Lawyer.