When a separation agreement is submitted to the court for approval, the court must find that the agreement was not unfair to either party at the time it was made, but is not required to determine whether the agreement is also equitable under § 25-318.
In this dissolution case, the parties entered into an agreement awarding Wife an equalization payment of $5 million for her interest in Husband’s mortgage company. After the agreement was made but before it was reviewed by the court, the value of the mortgage company significantly decreased. Husband challenged the fairness of the agreement and argued that the court should consider the subsequent devaluation of the business because it occurred before the agreement was adopted by the court.
Citing Buckholtz, the trial court determined that the agreement was fair when it was made and approved it. The agreement was later incorporated, but not merged, into the final decree.
On appeal, Husband argued that the trial court abdicated its duty to equitably divide property under § 25-318, and that the division in the decree was not equitable because of the company’s decrease in value. Husband also argued that the trial court should consider evidence after the agreement was made to determine whether the agreement was unfair.
The court of appeals held that:
- When the parties reach an agreement about dividing assets, the court need only determine whether the agreement is unfair under § 25-317. The court “need not divide the community assets equitably when the parties reach their own agreement.”
- When determining fairness under § 25-317, the court must look to the time of the agreement’s formation, and cannot consider evidence after the agreement was made. Otherwise, there would be “endless litigation over the ‘unfairness’ of the agreement’s terms based on when that review occurs.”
Here, the court of appeals affirmed the decree because it was not unfair to either party at the time it was made. The trial court fulfilled its duty to determine the fairness of the agreement under § 25-317, and was not required to also determine whether the agreement was equitable under § 25-318.