While we obviously can't anticipate the issues that are unique and individual to your specific situation, we can provide some examples based on our collective experience, of how we've handled difficult issues that commonly arise among divorcing couples. One caution: Ask your attorney to filter this information through the lens of the laws of your state. Remember, too, these examples are only some of the ways these issues can be handled.
Each of the sections below begins with a few examples of statements you might use to jumpstart the discussion. These statements are worded in a way to encourage and facilitate discussion rather than stifle it.
The Marital Home
You and your spouse will have to agree on what your home is currently worth. You then deduct the balance owed on all outstanding mortgages and lines of credit that use the home as collateral. There are several ways to arrive at a current home value.
If, for example, the agreed-upon value of the home (what you could sell it for) is $500,000, and you owe a total of $300,000 in mortgages and home equity lines of credit, you and your spouse would technically make a profit off the difference ($200,000) if you sold the house. If the home was the only asset and one of you wanted to keep it, he or she would have to pay the other half of that amount, or $100,000, to buy the other person's interest in the property.
A lot of our clients initially say that they want the home as part of their share of the settlement. We suggest that, before getting too attached to that idea, you talk it over with your neutral financial person. Depending on your overall financial situation, it might not be as good an investment as it sounds. It's best to explore all options in the context of your entire settlement and the desirability of meeting all your goals, together with those of your spouse, when possible.
Time with the Children
When faced with child-sharing issues, the courts -- and thus the parents -- traditionally have used a lot of labels, such as sole physical custody, joint physical custody, sole legal custody, joint legal custody, and others. Often, the amount of child support to be received or paid is inversely correlated to the amount of time the "non-custodial" parent spends with the children. As you can no doubt imagine, this is a source of endless courtroom battles.
So the question becomes, can we ignore the labels and just talk about how we're going to parent? Can we put together a parenting agreement that becomes part of our divorce? In some states, yes, you can prepare a parenting plan in lieu of custody designations. In others, state law may still require labels, but a parenting plan will help you both define your parenting time and obligations. If you're interested in developing a parenting plan, your attorneys and neutral child specialists can help you craft one.
Don't be afraid to try out some unfamiliar routines in shaping your time-sharing plan. Everything is going to be different after the divorce: your family structure, your households, perhaps even your jobs or schools. You or your spouse may be taking on new parenting roles. That can be scary. As such, both parents need to be open to change and letting go of old routines. Experimenting with new approaches for a specified trial period can relieve some of the pressure and provide a safe space to try out and get used to new roles.
Mary and Tom
Mary and Tom opted to include a neutral child specialist and a neutral financial specialist on their collaborative team.
They are in their third four-way meeting, having met separately with both specialists. The child specialist has also met with their two children, Suzy, ten, and Ben, seven. During their marriage, Tom was what might be termed the primary parent, handling most of the day-to-day routines with the children: getting them up on school days, making breakfast, and taking them to school. He is usually there when they return from school, or has made arrangements for them to go to a neighbor's. Tom has also taken care of most of the meals, laundry, family shopping, trips to the doctor, and driving to take the children to and from their many activities and lessons: dance, karate, hockey, soccer, and piano.
Mary is a successful entrepreneur, having built her business from scratch, from a one-woman operation to fifteen full-time employees. While she recognizes that Tom has done most of the day-to-day parenting of the children, she has also devoted a number of her evenings and weekends to spending time with the children: attending their activities, practicing piano with Ben, and helping both children with their homework.
The pending divorce has been a wake-up call for Mary. She wants a more involved relationship with the children and is willing to make drastic changed in her work patterns to achieve it. She would like to have an arrangement where the children spend half their time with her, and, as such, she intends to purchase a home in the same school district within a mile from the couple's current home. Mary even acknowledges that there is a lot she needs to learn about parenting and has enrolled in a parenting-skills class.
The child specialist has spent time with both children. It's clear from his reports that the children love both of their parents and would like to spend more time with their mother if possible. The child specialist also met with both parents on several occasions, shared with them his recommendations, and discussed each parent's viewpoints on the issue.
Tom has a lot of ambivalence about spending less time with the children and is concerned about whether Mary is up to the task of frequent full-time mother. On the other hand, he also looks forward to the possibility of having a respite from full-time responsibility for the children.
After much discussion back and forth, the parties agreed that, until Mary purchases her new home, the children would spend every other weekend with Mary at her apartment complex. They also agreed that Mary would assume half of the duties Tom currently has in transporting the children, and that she will be on call if Tom should need her to be with the children after school. If this works well, the parties will work out a 50-50 time-sharing arrangement that they would try for a six-month period once Mary is in her new home. The child specialist gave his approval to the proposal, indicating that he would be available to work with the parties and the children to get beyond any speed bumps that may arise.
Tom, Mary, the child specialist, and both attorneys then drafted a Parenting Plan, which detailed their agreements around sharing time with the children. What still remains to be discussed is a plan to ensure that after the divorce, Tom, Mary, and their children are all as financially secure as possible.
Support is usually divided into two main categories: child support (money paid to the caretaking parent for the purpose of caring for the children) and spousal support (money paid to support an ex-spouse). The divorce laws of the state involved usually include specific child-support guidelines that outline the amount of support to be paid, which is based on the number of children, the amount of time the children spend with each parent, and the parents' individual income levels. When one parent has sole custody of the children, the guideline amount sometimes is seen as mandatory. The more custody a parent has, the higher the child-support award. In a sense, this creates an incentive for parents to seek more custody.
In collaborative cases, the parties sometimes may ignore the rules laid down by the guidelines. They can focus instead on the needs of their children and themselves, and on how these needs can best be met. The parents often will set up a separate account (usually contributed to by both parties) to cover the cost of the children's activities.
Resolution of support issues is based on full disclosure of each parent's income and careful preparation, disclosure, and analysis of each one's estimated monthly living expenses for the immediate future.
Tom and Mary
Tom and Mary also met with Barbara, their neutral financial advisor. With her support, the parties gathered all their financial information. This data showed that Mary's income from her company is $200,000 per year, resulting in a net income of $13,500 per month. Tom had $5,000 per year in miscellaneous net income, or $416 per month.
Tom has a degree in social work, but he has not worked since their daughter was born. At that time, he felt strongly -- and Mary agreed -- that he had to "be there" for the children for a period of time. Now Tom expresses a natural apprehension about reentering the workplace and discovers that he would need to take some classes in order to get recertified by the state.
The parties agreed conservatively that the entry-level salary for a social worker would be $25,000 annually. Barbara, the financial advisor, worked with both Tom and Mary to help them put together their individual estimated budgets for the next year, meaning that each of them came up with budgets that reflected the time each would spend with the children before Mary purchased her home and after the purchase was completed. The resulting "pre-house" budgets were $4,000 for Mary and $6,000 for Tom. On this basis, Tom and Mary agreed, subject to review by their collaborative lawyers, that Mary would pay Tom child support of $2,100 per month and spousal maintenance of $6,000 per month. After Mary purchases her home and cares for the children half the time, the agreed-upon budgets will be $6,000 for Mary and $5,500 for Tom, and the support amounts would be adjusted accordingly ($1,500 child support and $6,000 spousal maintenance). The parties also agreed on a method of paying certain expenses for the children that are not related to where they are staying, such as school expenses, camps, lessons, and medical expenses not covered by insurance. It was agreed that they would each contribute $200 per month to a joint account to cover these specific expenses, the checkbook to travel back and forth with the children.
The recommendations only addressed the first year or so. How long the arrangement might last and when reductions might take place to adjust for Tom's expected return to the workplace would still need to be addressed by the parties with the support of their collaborative lawyers. But Tom and Mary were off to a good start.
Marital property covers many different types of assets, including bank accounts, mutual funds, investment accounts, insurance (with cash value), IRAs, pensions, profit-sharing plans, 401(k), stocks, stock options, business interests, cars, boats, recreational vehicles, real-estate holdings, time shares, and much more. All of these, and any other assets, need to be identified and valued. Here is where your collaborative lawyer -- and your neutral financial advisor if you have one -- will be a big help.
The list of assets prepared by the professionals is like a menu, in that you and your spouse are able to pick and choose who gets what, and whether certain assets should be divided equally. We suggest that you go through this list carefully with your financial advisor so that all the tax implications can be factored properly into the prices.
This article was excerpted with permission from The Collaborative Way to Divorce: The Revolutionary Method that Results in Less Stress, Lower Costs, and Happier Kids -- Without Going to Court by Stuart G. Webb and Ronald D. Ouskey (Plume Books, 2007). Webb, a family-law attorney in Minneapolis, invented Collaborative Divorce in 1990 and has practiced exclusively in the collaborative method ever since. Ouskey is a frequent speaker and writer on collaborative practice (in which he is a pioneer) and also practices in Minnesota.
Certified Divorce Financial Analyst
Business Valuators / CPAs