A recent Appellate Division case reminds us of the potential pitfalls of negotiating contingent issues in property settlement agreements, specifically as it relates to contribution to future college costs of children born of the marriage.
In Zegarski v. Zegarski, the parties had four children, with the two oldest already attending in-state college at the time of their divorce. Their post judgment litigation stemmed from a disagreement about their respective contributions to the college costs of their third child, four years after their divorce.
The parties’ PSA provided that both parents would contribute equally to “all reasonable and agreed upon college and secondary education costs…after any and all financial aid is received by said children.” The agreement further required the parties to “consult with each other and with the children with a view toward providing each child with the best education possible in view of their particular circumstances, each child’s educational abilities and desires, and the parties’ then existing financial ability.”
During their third child’s college selection process, the child expressed an interest in pursuing engineering and received offers of admission from a private out-of-state university and to Rutgers. When the child expressed a preference for the out-of-state school, his father indicated that he could not afford to pay half of the cost of attendance at the out-of-state school. His father remained steadfast in this position, even during an accepted students tour which he attended with the child and his mother. Over the father’s resistance, the child matriculated to the out-of-state school. When the father refused to pay for 50% of the education costs, the child’s mother sought contribution and counsel fees.
Following a failed attempt to mediate the issues, the trial court determined that the father was not required to pay for half of the out-of-state education costs because he did not agree to them. However, the trial court found it would be “terribly inequitable” to absolve the father of any financial responsibility. Accordingly, without a plenary hearing, the trial court surmised that the father’s contribution should be based on the cost of attending Rutgers, where the parties’ oldest two children went to school. Without creating a record of what that cost would be, the trial court concluded that in-state tuition would likely cost $20,000 per year after financial aid, and ordered the father to contribute that half that amount for the first year, with a 5% inflation adjustment for subsequent years. Both parties appealed, dissatisfied with the mandated contribution.
First, the Appellate Division concluded that the PSA did not require the father to pay half of the child’s out-of-state costs because he did not agree with them, which was an essential term of the agreement. The court rejected the mother’s argument that mere consultation about college was sufficient. The court further held that it would not enforce “an agreement to agree” to the extent one was implied in the agreement by the mother.
The court next determined that the PSA was silent as to allocation of college expenses in the event the parties did not agree. Accordingly, the trial court erroneously failed to address the Newburgh v. Arrigo and statutory factors which apply in the absence of an agreement.
Second, the court found the trial court to ascribe too much weight to its determination of what amount the parties would have likely paid for college in the absence of divorce. The court warned that such hypotheticals are conjecture and “fraught with uncertainty,” which is why that is but one of many Newburgh factors to consider.
Third, the court held that there cannot be a cap on a party’s contribution at the cost of in-state tuition where the balance of the Newburgh factors favors a private school. Here, the court found that the trial court did not make an appropriate analysis of this issue. Further, the trial court’s conclusion that in-state tuition would cost $20,000 lacked evidential support in the record.
In sum, the Appellate Division remanded the case for an analysis of the Newburgh and statutory factors in light of the PSA’s silence on this issue under these facts. This decision is illuminating for several reasons. Generally, it is a cautionary tale on an agreement-drafting issue that applies beyond just college contribution. How can one adequately address future/contingent events in an agreement? If it’s too specific, it cannot account for the number of outcomes which may arise down the line. If it’s too vague, this decision tells us the court must revert to the statutory and case law precedent, regardless of the parties’ intention to resolve the issue by way of a PSA.
With regard to college, this task is even more challenging when the children implicated by the agreement are young. How can one specifically address college contributions for babies and small children? In Zegarski, negotiating a term which would have applied in the event the parents could not agree on college selection would have given the court something to interpret, and may have spared the reversion to the default, precedential statute and case law. While impossible to account for every possible contingency, the wise and wary drafter should take a step back and ensure the agreement does not include a foregone conclusion that leaves a gap in the agreement if that outcome does not come to pass.
Interestingly, the Appellate Division’s decision made no mention of the child’s actual out-of-state’s education costs. This opinion plainly was not predicated on any dollars and cents inequities of the trial court’s rulings. The decision offers a helpful reminder to place equal emphasis on the language of the agreement which is to be enforced/set aside and the monetary implications of its implementation.
Katherine A. Nunziata is an associate in the firm’s Family Law practice, based in the Morristown, NJ office. You can reach Katherine at (973-548-3324) or at firstname.lastname@example.org.