Security and the Law
Keep Your Spouse InformedIn a recent action in Pennsylvania, a wife attempted to set aside a divorce settlement agreement that she entered into with her former husband. The wife attempted to invalidate the agreement, claiming that it did not contain full and fair disclosure of the value of the husbandâ€™s security alarm business.
The wife asserted that the husband informed her that the business was valued at a particular price. However, the husband sold his business for almost four times the price six months after the agreement was executed.
The partiesâ€™ agreement had provided that they be fully and completely informed of the value of the assets. Furthermore, the wife was office manager for the husbandâ€™s burglar alarm business for many years. She filed her husbandâ€™s business tax returns and acted as corporate secretary.
The lower court denied the wifeâ€™s petition to set aside the divorce settlement agreement.
When the husband purchased the security alarm company, his wife was an employee. The wife continued her employment after the parties married. She was the office manager and was responsible for accounts payable and receivable, wrote all checks and did all deposits, billing and customer service work.
Part of the settlement agreement provided that, â€œThe parties do hereby warrant, represent, declare and do acknowledge and agree that each is and has been fully and completely informed of and is familiar with and cognizant of the wealth, real and/or personal property, estate and assets, earnings and income, income tax, circumstances and situation of the other, and that each has made a full and complete disclosure to the other of his or her entire assets and liabilitiesâ€¦â€
Approximately six months after the divorce, the husband entered into an asset purchase agreement to sell his company to another security system company. He sold his company for approximately four times the amount represented in the settlement agreement.
With respect to the wifeâ€™s claim to set aside the agreement because it failed to set forth a full and fair disclosure of the partiesâ€™ worth and unfairly allocated to the husband a majority of their assets, the court rejected her position.
It found that the wifeâ€™s knowledge of the value was confirmed by the fact that she was a knowledgeable, working businesswoman, was involved in the operation of the business, continued to execute the corporate income tax returns and that she had knowledge of the income earned by the security alarm company.
The wifeâ€™s appeal therefore was denied.