Divorce is overwhelming for so many reasons, not the least of which are the financial implications of separating. Figuring out how to support two households instead of one and still accomplish your financial goals are parts of the challenges of divorce. While asset division is never easy, and hard decisions are required, this post will briefly explain how divorce mediation helps couples divide assets fairly and equitably.
What is asset division?
There is a common misconception that couples are required to divide everything equally. Not so!
Massachusetts follows the principle of “equitable distribution” when dividing property in a divorce. Equitable does not necessarily mean equal; instead, it means dividing assets fairly. The goal is to ensure a just outcome that might be 50/50 but not necessarily 50/50.
All divorcing couples are required to disclose all financial assets and liabilities to each other and to the court using court financial statements. This includes financial accounts like bank accounts, investment accounts and retirement accounts and real property like the value of real estate, vehicles, and jewelry. All liabilities must also be disclosed. All assets and liabilities need to be addressed in the divorce agreement, which is called a Separation Agreement in Massachusetts.
How divorce mediation helps couples divide assets fairly
Your mediator will guide you through the financial disclosure process and ensure you have both reviewed the other’s financial statement. The mediator will then facilitate a discussion about your financial interests. Interests I often hear about in mediation include:
- I’d like to be able to afford to be a homeowner
- I want to be able to retire before I’m 70
- I want to be able to put the kids through college
- I want to get debt-free
- I want to afford to move overseas
- I’d like to stay in my community so I can remain connected to my congregation and friends
Once interests are determined it easier to work together to decide how to divide assets in way that is fair, reasonable, and equitable.
Consider this example from one of my mediations:
Spouse A wants to be a homeowner and plans to work “until I drop.” They have a large retirement savings from previous jobs.
Spouse B wants to retire at 65. They are a homeowner but have little retirement savings.
Option 1: Divide 50/50.
If they divided things 50/50 Spouse A would not have enough cash to be a homeowner and Spouse B would not have enough retirement savings to retire by 65. They would both lose!
Option 2: Make decisions based on interests.
By making interest-based financial decisions Spouse A received the house and spouse B received a very high percentage of the retirement assets. Win-win!
Are there other financial issues we need to figure out in our divorce?
Yes! If you are parents decisions need to be made about child support and other child-related expenses like activities, uninsured expenses, and schooling. Spousal support, which is commonly known as alimony, may also be a consideration. Your mediator will guide you through all those decisions.
Can I change my mind about property division after the divorce?
No. All property division in a Separation Agreement functions as an independent contract (the legal term is “survives” the judgment of divorce). That means unless fraud was committed once assets are divided they cannot be undivided by the court.
How can I learn more about how mediation can help us divide assets fairly?
If you would to learn more about how mediation can help you divide assets fairly schedule a free half-hour consultation with Ben.