Why Understanding Future Income Is Important in an MSA

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An MSA is a Mediated Settlement Agreement that is binding once executed (or signed) and that guides the terms of your divorce. In fact, you can enter into a binding MSA even before you file for divorce, but as with everything else related to divorce, it’s complicated. Many factors go into ensuring that your MSA upholds both your financial and parental rights, and having an experienced Florence divorce attorney on your side is always well advised.

The Benefits of an MSA

It is generally considered beneficial to resolve your divorce terms between yourselves. Not only can it save you time and money, but it also allows you to keep decision-making power in your own hands. And you and your divorcing spouse obviously understand your financial and parental situations better than a judge can – with his or her mere glimpse behind the curtain. If you and your divorcing spouse cannot come to terms between yourselves, mediation is an excellent option. Here, you, your divorcing spouse, and a neutral third party who is a professional mediator will help you explore your best options and find common ground that you both are willing to sign off on. What you do not have at mediation, however, is the judge’s keen insight into unforeseen financial results (that you failed to address carefully enough in the mediation process). This is just one of the many, many reasons that working closely with a focused divorce attorney throughout the divorce process is always in your best interest.

Unforeseen Results

An example of an unforeseen financial result in an MSA is highlighted by a 2017 Supreme Court of Texas ruling (in Loya v. Loya). The particulars include:

  • The Court was required to decide whether a bonus that one ex-spouse received after the MSA was executed was actually future income.

  • The term future income was included in the MSA, but no definition was provided.

  • The upshot was that both parties agreed – in the MSA – to keep their own separate income moving forward, but they did not bother to define this future income.

  • Later, the exes disagreed regarding what was meant by the term future income.

In Loya v. Loya

In Loya v. Loya, the court distinguished between the term future income and the term future earnings in its decision-making process. The case focuses on whether one spouse’s bonus, which was received after the MSA was executed, fell into the classification of future income – since at least part of it was based on work performed prior to the MSA’s creation. The trial court found that the recipient of the bonus was entitled to keep it in its entirety. The spouse who was left out of the bonus disagreed on the grounds that this wasn’t her interpretation of future income and that this wasn’t what she signed off on (a pesky unforeseen result).

You Need an Experienced Florence Divorce Attorney on Your Side

Brett Pritchard at The Law Office of Brett H. Pritchard in Florence, Texas, is a practiced divorce attorney who is dedicated to ensuring that you are not blindsided by unforeseen divorce consequences. To learn more, please do not wait to contact or call us at 254-501-4040 today.

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