Many Divorce Mediations, include complex financial issues that are often complex …these issues include those where one spouse’s pension is made up of both pre-marriage (sole and separate) contributions and marital contributions
How do I choose a Divorce Attorney? Choosing an attorney who is right for you and right for you is among the most significant decision a client must make.
We acknowledge that the essence of Divorce Mediation is our shared belief that it is in our best interests to commit ourselves to avoiding litigation. We agree to use Divorce Mediation, which does not rely on a Court-imposed resolution, and does rely on an atmosphere of honesty, cooperation, integrity and professionalism geared toward the future well-being of the participants. We want to minimize, if not eliminate, the negative economic, social and emotional consequences of protracted litigation…
Divorcing parties who enter Divorce Mediation are generally advised by their mediator to have the final agreement reviewed by their separate attorneys before signing. For the client who wants additional assurance that the agreement coming out of the Divorce Mediation process is equitable, having separate counsel review it prior to signing can address that concern, if the reviewing attorney is involved at the beginning of the case.
Since it is only the client and not the attorneys who actually take part in the actual mediation sessions, the challenge in reviewing the parties’ final agreement is that the attorney was not privy to all the considerations and detailed information that led to the final decisions. And, to do the research and duplicate all of document reviews and analysis that occurred in mediation is not cost effective and it defeats the purpose of efficiency built into mediation, as well as the focus on client centered decisions that characterize divorce mediation.
However, what the reviewing attorney can do at the outset of the mediation and continuing through the mediation process is to pay special attention to the viability and integrity of the process being conducted by the mediator. This will do as much as anything to assure that the outcome of the process will result in an equitable outcome.
Several examples of this are these:
If there is a residence to be purchased by one of the parties, what is the process used to ascertain a current residential market value and how will the amount of the buy-out of the other party’s equity interest be determined. Are the parties’ going to decide themselves the residential value, will a market analysis be conducted or will an appraiser be hired to place a value on the residence? And, once the residential value is determined, what formula will be used to arrive at each party’s marital interest? Each way of proceeding has its own considerations for an equitable outcome.
Another example concerns the valuation of a professional practice or a business. This asset could be the most significant one owned by the parties, and how its’ value is arrived at is of import for each party. Do they decide themselves, is there a standard formula that can be used to determine value or will a business valuation expert be hired to analyze and value the professional practice or business? Each of these ways to arrive at a value has its own challenges and the mediation client must be fully informed about the consequences of using each of the methods.
If the case involves spousal maintenance, and because the payment of spousal maintenance has tax consequences for each party, how will the mediator go about helping the parties know what might be the actual net dollar discretionary amount of varying amounts of monthly spousal maintenance payments? Do the parties decide themselves, does the mediator make suggestions or is a financial expert brought in to help the parties know the tax consequences of their decision?
These are just a few examples of what a reviewing attorney needs to consider at the outset of the Divorce Mediation to be sure the integrity of the process is solid. If so, the reviewing attorney will be in a position to know whether the way the mediation is being conducted is viable and will allow for a fair result.
Divorce Mediation is a voluntary process and is most likely to be successful if the parties are willing to make a good faith effort reach agreement. However, there is no legal obligation to either mediate or to agree any particular settlement.
Agreement in Mediation can be reached only when the parties have determined beforehand that their marriage relationship is ended. All questions of marital fault and blame will be disregarded in Mediation.
The Divorce Mediator is not a marriage counselor and will not attempt to reconcile the parties’ marriage.
Divorce Mediation is conducted in a spirit of cooperation and a willingness to listen to the other party.
The Mediator serves in the capacity of impartial third party and does not make decisions for either party or specifically advise either party how they should decide any issue. The Mediator will help provide options and alternatives in decision-making.
The Mediator provides the factual and legal information the parties need to make decisions and reach agreement.
The attorney / mediator does not represent either party but serves as a facilitator to the Divorce Mediation process.
Each party is encouraged to assert their own needs and to respect the needs of the other party.
Issues regarding division of marital property and spousal maintenance are resolved on the basis of the parties’ respective family circumstances and the laws of the State of Arizona.
During Mediation and where appropriate the parties will be encouraged to seek advice from outside professionals who can provide specialized information about the issues at hand. Parties are discouraged from seeking advice from friends and relatives.
The parties are encouraged to continue to share the responsibilities of the children in their post-divorce relationship.
There are at least 4 areas in an already existing order of divorce or legal separation that are well suited for post decree modification mediation or collaborative settlement. The current orders in each of these areas may be modified if the situation calls for it and the statutory conditions exist for modification.
- Child Support. By law, child support may be modified, post decree, if either the financial circumstances of a party have significantly changed since the original child support order, or if the initial residential arrangements have changed. If, for example, one of the parties has a reduced income or increased income, such a situation signals at least a discussion and quite likely revisiting the calculation on which the original child support was based. Also, if the expenses for the children have increased or decreased, this may also be grounds for revising the child support order. Finally, if the residential arrangements for the children have changed, for example, where a child has changed residences and is now living primarily with the other parent, this will require a modification in the child support.
- Spousal Maintenance. If the original spousal maintenance order was not stated to be “non-modifiable”, this support payment may be modified post decree. The basis for the modification is whether one or the other party has both continuing and substantially changed circumstances from the time of the order, and whether these changes would warrant a spousal maintenance modification. Be sure to note that such changed circumstances must be on-going, not simply a reduction in salary for a several months only, for example. Such changed the circumstances might be such that either party has a significantly reduced or increased income or either party has greatly increased (or reduced) expenses from the time of the original spousal maintenance order.
- Child Parenting Arrangements. The law also allows the original parenting arrangements to be modified when the family situation calls for it. This can be one of the most difficult kinds of situations to assess, since it requires a consideration of whether the current living arrangements for the child are best or whether something else would be better. For example, as a young boy gets older, would it be best for him to be living primarily with his father rather than maintaining his current primary residence with his mother. There could be any one of a variety of possible living arrangements that might now be better suited for a child than was the original living arrangement.
- Property Settlement. In general property settlements are not modifiable; when they are done and ordered by the court, it is final. However, there may be situations where such finality has been left open in the property settlement or where each party will benefit by a modification of the original court-ordered settlement. In this event, also, the mediation of such modifications is a client friendly way to proceed.
While some jurisdictions are moving toward a formulaic approach to the payment of spousal maintenance, leaving little room for a full review of the parties’ circumstances, many jurisdictions still provide only the most broad of guidelines for decisions around the amount of spousal maintenance paid. For these latter jurisdictions, using a rational approach to ascertain the amount of spousal maintenance paid may be more time consuming and difficult, but it most often results in more equitable settlement that more closely reflects the parties’ actual circumstances. The approach I like to take in my practice first looks at the facts on the ground in order to arrive at an agreed upon spousal maintenance payment.
It starts with a thorough analysis and review of the reasonable living expenses of each party. While this review opens the possibility of argument about this expense or that, parties are advised and cautioned in several ways. They are asked to review their historical spending from such sources as credit card statements, checks and receipts, so the expenses stated are accurate. And, they are cautioned that because their stated expenses are at a certain level of spending does not mean this level can be sustained in their new circumstances or the total income pool available is sufficient for such spending. And, they are advised, if the spending level they wish to enjoy is important enough to them to maintain rather than decrease, then additional income sources (i.e. further employment) may be needed to meet their wishes. The parties are advised that the expense budget is primarily a reality tool to ground them in their new two-household circumstances and the impact this may have on their lifestyle choices.
The tool that most cogently focuses them in their new reality is an expansive schedule of varying spousal maintenance payments and how each payment level affects each party. This schedule includes an after tax scenario for each party for each spousal maintenance payment level, for example, of $4000, $4500, or $5000 per month, whatever broad range of payments may be applicable to the parties’ income level – from the low to the high. The schedule has lines at each payment level for each party’s:
1) Gross monthly income from all sources.
2) Monthly spousal maintenance payment.
3) Total monthly income, which includes the receipt of spousal maintenance for the payee and subtraction of the spousal maintenance payment for the payor.
4) Total monthly expenses.
5) Total taxes paid or deducted for each respective party.
6) Discretionary (after tax) income remaining for payment of expenses.
7) Net income after payment of taxes and expenses.
This schedule provides an eye-opening, reality based view of each party’s income situation. Equitability is built into the schedule review, since it allows each party to see what both have left before and after their respective desired living expenses are paid. Vast differences in discretionary income are a compelling reason to narrow the gap, and living expenses that result in little or negative cash flow speak to a more realistic spending level. As important, the facts speak for themselves in such a schedule and serve as a strong incentive for the parties to work together for an equitable solution to the amount of spousal maintenance paid.
Every case is different than the next, having its’ own unique character and issues. And, while the differences in the modalities for reaching settlement are varied, and in some cases having a significantly different impact on the clients – such as Divorce Mediation contrasted with Divorce Litigation – the subject matter of all modalities is the same. This is a brief overview of the kinds of issues that need to be addressed in each case, if they are relevant to the particular situation. The list is not complete but it provides a good sense of what is to be addressed, and it falls under four general categories: Property and Debt Division; Parenting Arrangements for Minor Children; Child Support for Minor Children; and Spousal Maintenance (alimony). Thus, all final divorce settlement processes need to address these issues.
Property and Debt Division
-Ownership of business
-Stocks, bonds and other securities.
-checking and savings accounts
-Life insurance policies
-Income tax issues
-Attorney or Mediation fees
-Retirement type accounts
Parenting Arrangements for Minor Children
-Residential arrangements and time-sharing
-Pick-up and drop-off
-Decision-making for significant issues
-Child care arrangements
Child Support for Minor Children
-Arizona Child Support Guidelines
-Medical insurance for minor children
-Periodic exchange of income information related to child support
-Post-secondary education tuition for children.
-Periodic payments or lump sum
-Tax deductible or not
-Duration of payments
-Modifiable or non-modifiable