The Impact of a “Karon” Waiver on Spousal Maintenance: What Divorcing Couples Must Know
If a couple negotiates a divorce settlement, they have unique settlement options that may not be available to them if their case is litigated. A “Karon” waiver, an agreement meant to stop courts from modifying spousal maintenance obligations post-divorce, is one such settlement option. Experienced attorney Kathleen M. Newman of the DeWitt LLP law firm can advise you as to whether a “Karon” waiver is appropriate in your individual circumstances.
Minnesota courts are authorized to award spousal maintenance where the spouse seeking spousal maintenance does not have enough income to meet his/her reasonable needs or is otherwise unable to adequately support themselves. Further, the courts have broad authority to modify spousal maintenance awards made in the original divorce decree. Generally, modifications are possible where there has been a “substantial change” in circumstances that make the original spousal maintenance award “unreasonable or unfair”. For example, if the person paying spousal maintenance experiences job loss or a substantial decrease in income, he/she can ask the court to reduce the spousal maintenance amount. Likewise, if the person receiving spousal maintenance has a reduction in income or experiences an increase in expenses, like significant medical expenses, that person can ask the court to increase the spousal maintenance award. Even if a court awards maintenance for a specific number of years, the recipient can come back to court at the end of the term and ask that the award be extended, or even made permanent. If your case is litigated and the court awards spousal maintenance, that award can always be changed in financial circumstances change. Leaving courts with the power to modify spousal maintenance can cause costly and emotionally draining court battles, years after the divorce was final.
However, there is a way to avoid court modifications of a spousal maintenance award, the use of a “Karon” waiver. Named after a 1988 court case, Karon v Karon, a “Karon” waiver limits the court’s authority to modify either the amount, the duration, or both, of a spousal maintenance award regardless of changes of financial circumstances. A “Karon” waiver can only be included in a divorce decree if the parties agree to it. If a case is litigated, the court cannot include a “Karon” waiver in a divorce decree.
To be valid, a “Karon” waiver must: (a) be agreed on by the parties; (b) expressly divest the court of jurisdiction to modify the terms of the spousal maintenance award; and (c) be incorporated into the final Judgement and Decree. Further, the court must specifically find the agreement is fair and equitable, is supported by adequate consideration and that full disclosure of each parties’ financial circumstances has occurred. In a negotiation, the parties can agree that the court can never modify the amount of the spousal maintenance award or never modify the number of years spousal maintenance is being paid, or both. Usually, if the person receiving spousal maintenance agrees to a “Karon” waiver, they receive “adequate consideration”, often an additional cash or property settlement.
Don’t consider signing a “Karon” waiver without getting legal advice. Done correctly, the waiver will certainly stop court battles about modification of the spousal maintenance award. On the other hand, there’s also the certainty of no judicial relief for changes in financial circumstances, even due to catastrophic illness or even a pandemic. Unpaid spousal maintenance can expose the payor to money judgments or contempt proceedings and spousal maintenance is not dischargeable in bankruptcy. If considering a “Karon” waiver be sure to engage a lawyer skilled in drafting the waiver.
Take-away: A “Karon” waiver is a powerful legal tool but it is not for everyone. If you are considering agreeing to a “Karon Waiver” in your divorce, contact attorney Kathleen M. Newman of the DeWitt LLP law firm so we can help you decide what’s best for you now and in the future.
Minn. Stat. §518.552.
Minn. Stat. § 518A.39, Subd. 2.
Karon v. Karon, 435 N.W.2d 501 (Minn.1989).
11 U.S. Code § 523.