No-change clause: what is it and why do we advise against including it in your divorce settlement

Often the same or similar questions are asked in the case of a divorce. In this article we answer the following question:

Question:

What is a no-change clause and why you should not include it in the divorce settlement?

Answer:

Should you decide to get divorced, you have a great deal of freedom to make agreements on spousal maintenance, provided you do so together in mutual consultation and include them in a divorce settlement. A divorce settlement is the written agreement between you and your (former) partner in which the mutual arrangements are laid down. You can make agreements about the amount of spousal maintenance, for example, but also about the duration of the maintenance. You can, for example, agree to pay spousal maintenance for a longer or shorter period of time than stated in the law. The former partners are also free to agree on something other than the amount of spousal maintenance calculated on the basis of maintenance calculations. In addition to the amount of maintenance and the duration of maintenance, you can also agree that the amount of spousal maintenance determined will not be changed. This is called a no-change clause.
If a no-change clause is included in a divorce settlement, this means that the court cannot change the amount of the maintenance. But there is an exception.
If one of the parties wants to change the previously agreed maintenance after some time, there must be such a drastic change in circumstances that the party requesting the change can no longer be held to this no-change clause according to the standards of reasonableness and fairness. This means that only in very special cases, the amount of spousal maintenance can still be changed in the future.

Advantages of no-change clause

A no-change clause does, of course, bring with it a certain degree of certainty. After all, you know what has to be paid and what you will receive during the entire maintenance period.

Disadvantages of no-change clause

Nevertheless, no one knows what the future may bring. Especially in the current times with the coronavirus pandemic, a no-change clause can cause problems. Because how can you break the effect of a no-change clause? I would like to give you an answer below, based on a concrete example.

What if your income has seriously decreased and you can no longer pay maintenance?

The party who can no longer meet the obligation to pay maintenance can present the case to the court. The court will then test whether there has been such a change of circumstances that when they drew up the agreement and agreed on the no-change clause, the parties could not have foreseen in any way that this would happen. The party who wants to break the no-change clause (the requesting party) has the obligation to furnish the necessary facts. This means that you have to prove, with documents, that what is happening now could not have been foreseen in any way. And that these unforeseen circumstances make it impossible for you to maintain the no-change clause.

In practice, it is often difficult to prove this. It means, for example, that you have to show how your income position was before, in this case, the coronavirus pandemic had its effect on the world. Additionally, you have to give insight into your current financial situation. If you are an entrepreneur, you need to show this by means of the company’s financial statements and a cash flow statement. After all, with these you can show what the situation was like before and after. But this also often causes problems, because if things suddenly go very badly financially, you often can no longer afford to pay the accountant to draw up all these documents and provide insight into precisely what the court needs. In short, demonstrating that things are going very badly then becomes difficult.
And that is the crucial point, because only if you can fully substantiate that you could in no way have suspected that at the time of signing the divorce settlement and thus concluding the no-change clause, this situation would arise and furthermore that this would have such an effect that it would be absolutely unreasonable for you to continue paying spousal maintenance, you may be successful in breaking the no-change clause.

How likely is it that the court will adjust the amount of maintenance in the case of a no-change clause?

If you look at case law, you will also see that the courts are very hesitant to adjust the spousal maintenance in case of a no-change clause. After all, the parties did not agree to a no-change clause for nothing, so you can expect a certain degree of certainty from it. Especially for the one who receives the maintenance. It is often important that a complete set of agreements is made during the divorce settlement. For example, a no-change clause is agreed under the condition that a lower amount of spousal maintenance is accepted. Especially when these kinds of agreements have been made, it becomes all the more difficult to break the no-change clause. So these issues play a role as well.

My advice

In our practice we often see a no-change clause being included in a divorce settlement too soon. And since nobody knows what the future may bring, the inclusion of a no-change clause can cause major problems for some people. Imagine having to pay the high amount of spousal maintenance when you are actually no longer able to do so. Moreover, you cannot prove that you are unable to pay because you cannot pay the accountant’s invoice. What to do then? To prevent this kind of situation, we usually recommend not to include a no-change clause in the divorce settlement. Unfortunately, we often see that mediators, who have a different background from the legal profession, do not always fully appreciate the consequences of a no-change clause. Therefore, our advice: never agree to a no-change clause, because nobody has a crystal ball!

Should you have any questions following this article, please do not hesitate to contact me. I will be happy to help.