Buyer Beware—Know what you are signing in a divorce property settlement agreement
In many divorces in Mississippi, five years following the divorce, the same amount of money is being paid in alimony despite the cost of living having increased during the same period. That same money will not buy what it once did. The solution is an alimony escalation clause. The problem is anticipating the impact of that escalation clause.
In 2000, the Mississippi Supreme Court first approved the use of alimony escalation clauses in property settlement agreements. Up until then, Mississippi courts had only addressed the use of escalation clauses in child support cases where they were, and still are, disapproved more than approved. In Speed v. Speed, the Hinds County couple entered into a property settlement agreement. Under the agreement, the husband agreed to pay $1,500 per month in alimony. The parties further agreed that the payments would “increase or decrease directly in relation to the increases and the cost of living as determined by the U.S. Department of Commerce Consumers Cost of Living Index, to be adjusted annually….” Speed at 222. For ten years, the husband paid in accordance with the agreement, but then quit paying the escalated amounts. At a contempt hearing for his failure to pay, the husband complained the escalation clause was unfair and unenforceable. The chancery court agreed. In reversing the chancery court, the Mississippi Supreme Court stated:
“Absent fraud, overreaching or mistake, escalation clauses in property agreements are enforceable even though the agreement may prove to be improvident for one party in the future.” Speed at 226.
The Court said alimony escalation clauses in property settlement agreements protect both spouses from increases or decreases in income and encouraged their use in future cases.

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