Why Working With a Financial Neutral Can Help Your Mediation
{4 minutes to read} In other posts, I’ve often touted the benefits of working with a financial professional, either together or separately, during a couple’s divorce mediation. In this post, I want to summarize the circumstances under which I think a mediation would progress most easily, and that is if both spouses worked with a financial professional who acts as a neutral.
While the training and expertise of the financial professionals would be the same, a financial professional working as a neutral is different from a financial professional who only works with one party and only supports that person’s interests. The latter situation might arise because one party feels that the other has a superior knowledge or acumen for financial matters, and that the less knowledgeable party needs more education or help than the other. In such a case, the financial professional is an advocate for that party and definitely should not be considered a neutral, any more than either party’s attorney would be considered a neutral.
A financial neutral in mediation is more akin to the role of a financial neutral in the interdisciplinary collaborative practice model. They would work with both parties and ultimately present complicated financial concepts in a simple, easy-to-understand fashion.
Here are some other reasons why working with a financial neutral is a good idea:
1. They Are More Cost-Effective.
Although I do enjoy working on my clients’ budgets and using Family Law Software, it’s not always the most cost-effective way for clients to gather information and make a budget. If budgeting is not a comfortable process for either of you, a financial neutral can take your expenses, question you about them, organize them, and prepare an accurate budget at a cost typically lower than the mediator’s.
2. They Can Prepare Budgets More Thoroughly.
Since this is their area of expertise, a financial neutral will be much more proficient in gathering the financial data necessary, interpreting different scenarios, and ensuring that the budget precisely reflects your current expenses. In addition, they can accurately depict what will happen in different scenarios, such as a budget if your home is sold and you rent; a budget if you sell your home and buy a new one, etc. They can also explain the tax consequences of the different options so you can make more informed decisions.
3. They Demonstrate That Splitting the Difference Doesn’t Always Work.
Sometimes people think that if there is a budget deficit, they should just split the difference, but that can result in neither party meeting their budgets. Instead, a financial neutral may be able to suggest ways that you can satisfy debt, decrease costs or otherwise make it feasible for you both to live separately and pay your expenses.
4. They Can Help Determine Income.
If one of you is self-employed, the financial neutral can help you agree upon what income, based upon your actual financial reality, should be used for the purposes of budgeting and calculating support. If you are working with someone who is advocating for one party, it can be more difficult to arrive at an agreeable number, hence the advisability of using a financial neutral.
If you determine that a financial neutral would be well worth the cost, your mediator can suggest professionals who can fulfill this role.
Why You Should Mediate Your Prenuptial Agreement
{4 minutes to read} You and your fiancé have discussed the terms that you would want in your prenuptial agreement. You seem to be in agreement, so you feel that there is nothing to mediate and don’t see the need for a mediator when you could just have your lawyer draft the agreement and your fiancé can have an attorney review it. So, why involve a third professional and incur an additional fee when nothing is really in dispute?
You May Not Have Addressed Everything
A prenuptial agreement (prenup) can be broad or limited, but in order to know that you have considered everything you may want to include, you need to know everything that could be addressed and how those situations would be handled under the law without your prenup.
Without a Mediator:
Your attorney would let you know you forgot to discuss “x” issue and then will include “x,” likely in a manner that benefits you. In reading the agreement drafted by your attorney, your fiancé could feel blind-sided because something was included that was not discussed, even if he or she agrees with “x.”
Even if you speak to your fiancé before “x” is inserted, you may innocently start off with “my attorney said...” which can be a little off-putting to the other person and places you in a positional framework, even if that is not your intention.
With a Mediator:
Your mediator will objectively raise all of the terms that could be provided for in a prenup, and you both will address your feelings and concerns about including those provisions — or not. This will include a discussion as to why something is important to the other, the understanding of which is vital to reaching an agreement. It also can lead to other viable options that neither of you considered.
Drafting Misunderstandings
Your attorney’s job is to represent your interests only, so if there is some leeway when drafting the agreement to use language that is more favorable to you, that is the language that would be used. While you may not even be aware of that drafting choice, your fiance’s attorney would certainly recognize such a choice of language and point that out to your fiancé. While you can explain that you didn’t direct your attorney to do anything like that, it would be best to avoid that misunderstanding and those hurt feelings with a more impartial drafting.
Avoid Attorneys Dictating the Process
If there is no mediator and there are disagreements between you on terms, the only way those disagreements can be addressed would be through the attorneys. The attorneys will be sending letters or emails back and forth, or having discussions over the phone without the two of you being present, all of which will be billable. As important as client involvement is in a separation, it is even more important in the discussion of a prenup when you are preserving — rather than dissolving — your relationship.
An adversarial process can place a strain on your relationship needlessly. You will still have an attorney review the agreement you made in mediation, but the nature of that is much different than having the attorney negotiate terms on your behalf.
A word to the wise — keep the misunderstandings and positions to a minimum and create your prenup with a mediator.
Don’t Be Afraid of a Prenup [VIDEO]
Prenups illicit very negative reactions, but there are a lot of valid reasons why someone would want a prenup and it doesn't have to mean that they think that your marriage is doomed to fail. You are going to want your marriage to be a collaboration and mediation is a collaborative way to create a prenuptial agreement.
I Just Want What I Am Entitled To! [VIDEO]
To find out what you’re entitled to, you need to go to court. But going to court does not guarantee you will get what you want. When someone focuses on entitlement, there are usually some underlying emotions that need to be addressed. If those underlying emotions haven't been dealt with in a productive way, you're not going to be able to move forward in the positive way that you're looking for.
More Reasons Why You Should Mediate
{4 minutes to read} At a recent conference for divorce and family mediators that I attended, I heard a panel consisting of judges, hearing officers and law clerks speak to the reality of the court process. Here are some of the negative consequences they raised:
Timeframe
Although there are rules that say the entire process in New York County would be “trial ready” in less than a year after filing, the reality is that it could be two years or more to get to that stage. This is especially true in a case in which there are extensive financial matters or parenting issues to be addressed.
In mediation, you control the time frame and the matter will proceed at a pace that you both want.
You are subject to the court’s mandate and control.
Judges make it painfully clear that they are in control of the courtroom, and by extension, in control of you and your family. They focus on pushing litigants to settle, but the terms are those that the judge believes each of you should accept. The judge will also let you know what could happen at a trial if you don’t agree to what the judge feels is a reasonable settlement.
In mediation, the focus is on getting to a settlement that meets each of your respective interests and the interests of your children. That might mean that the two of you agree on an option that is in the best interest of your family, but is very different from what a judge would suggest as a “reasonable settlement.”
Your children could be part of the court process.
If you cannot agree on a parenting plan, one of the judges was clear that he would order an attorney for the children; forensic psychological evaluations of the parents and the children; and then possibly a meeting between the judge and the children. This involves your children in a process that is at best intrusive for them and at worst, traumatic. Ultimately, the judge would weigh all of this in terms of making a decision as to with whom your children will reside and the access they have with each of you after a trial.
In mediation, your children are not present, and you retain the right to make decisions about where they reside and how you share access with them. If you can’t agree in mediation, there are some options for you to explore:
You can seek the input of a child specialist to help the two of you sort things out; or
You could have a child inclusive mediation process. This means that a mental health professional (MHP) who is trained in this process, would meet with you. In a safe place, the children are encouraged to talk about their experiences with their parents’ conflict, as well as their thoughts and needs regarding the future.
After that meeting, the MHP joins the parties for a feedback session and explains the child’s particular experiences and what may likely happen if there is no change in the child's experiences. Both the MHP and the mediator support each parent’s understanding of the impact they have on the children and their ability to change to a focus on co-parenting that enhances a more positive outcome for the children.
This is the opposite of a court process which is threatening to both the parents and the children.
There are definitely some divorcing couples who need to avail themselves of a court process, but for those who don’t, mediation provides a better process according to judges and court professionals who deal with it first hand.
Preparing for the Initial Mediation Meeting
{3:30 minutes to read} Both the clients and the mediator want to be sure that the first meeting is productive, both because of the cost involved and because everyone wants to feel that something was accomplished and momentum is building.
That’s why at the initial consultation I suggest clients to do the following before scheduling the first meeting:
Review the checklist I provide.
To the extent that it’s productive for them to do so, I suggest that clients talk about the issues that need to be addressed in order to have a separation agreement. Anything done outside of the mediation session would save time (and money). I’ve found that most clients start the mediation with some ideas on parenting and possibly asset distribution. Support, on the other hand, is more of a hot-button issue and may be better left for the mediation.
I also emphasize that if the discussions aren’t productive and lead to conflict, then they shouldn’t talk substance outside of the mediation. In that case, I suggest that they read through the checklist and the brief summary of the law that I also provide, and get some ideas as to proposals that they would want to make on the relevant topics.
Enter budgets into the software.
I use Family Law Software which allows clients to enter their financial information into this web-based program, which is then submitted to me. From there, I can review and then send back to them their expenses in budget form, so we can start discussions on support.
If the couple hasn’t already agreed upon what is happening to the family home, I suggest they hold off on doing budgets until we speak about their future housing. It only makes sense for them to do budgets based upon what their expenses will be when they physically separate — as opposed to their expenses when they are sharing a home.
Since budgets are a vital component in agreeing upon support, the initial entry is a small-yet-vital component to getting the discussion started. We will spend time in the mediation going over budgets, confirming expenses and discussing the appropriate income to use for each.
If it appears that the budgeting isn’t in the clients’ wheelhouse, we will discuss engaging a financial professional.
Gather financial documents.
I provide clients with a list of financial documents that they will need to produce and exchange in the mediation. To the extent that they apply, they need to bring copies to the meeting or provide them in advance.
Since full and complete financial disclosure is a necessary component of mediation, it’s important to have all of this available at the beginning of the mediation.
Good preparation not only helps mediation to progress effectively, but it serves to ease your concerns. Doing something constructive and practical is a good way to calm the nerves and relieve the stress that is inevitable when you begin this emotional and intimidating process.
Acknowledging the Fear of Separation
{3:30 minutes to read} Separating from someone you’ve loved, trusted, and who, most likely, was your best friend, is an incredibly scary concept on a deeply personal level. On top of that, you are also likely worrying about how this will affect your children, as well as how you will afford to pay your bills. It’s completely understandable that you’re concerned and frightened by both the process and the future.
Add to that, how hard it would be to express your fears to your spouse, who had previously been your “go-to” person.
If it was a mutual decision to separate, you may want to be stoic;
If you feel that it’s all his/her fault and that you are an innocent party, you probably don’t want to admit a vulnerability to your spouse at this point; or
if you feel guilty about initiating the separation, you don’t think your spouse would be sympathetic to your concerns.
So, what can you do?
If you’re unsure about the actions you are taking and why, meeting with a mental health professional will help you sort out your feelings. This may allow you to feel more comfortable with the decision that you are making.
Of course, friends are also a wonderful sounding board, as well as a source of support. However, you should try to avoid getting professional advice from them even if they have personally been through a divorce. Since every situation is different, legal or mental health advice from a friend may not be applicable to you, and may cause you to pursue unrealistic goals for your outcome.
Once you’re more comfortable with your decision to separate, you can address the practical fears by seeking professional help geared towards addressing the legal process of separation.,
1. Meet with a Mediator
I strongly recommend that you learn about mediation if you are not yet familiar with it. Many mediators offer a brief consultation at no charge, so you will be able to hear from a professional mediator in your area, about how mediation works. With that information, you will be able to determine whether or not it is the right process for you, as well as if the mediator is someone with whom you can work.
However, the mediator will want to meet with you both, so if you are not yet ready to tell your partner or spouse that you want to separate, you may not be ready for that meeting.
2. Meet with a Lawyer
If you feel that you want to have an idea of your legal rights and responsibilities before you begin mediation, you should have a consultation with an attorney. If you consult with an attorney who is also a mediator or collaborative professional, that attorney could both answer your questions and be open to consulting with you in the mediation.
You may be concerned and frightened by both the process and the future, but taking concrete steps such as these can help you move forward with more confidence.
What If Your Spouse Doesn’t Want to Separate [VIDEO]
In my practice, I have found that one spouse is often prepared to move forward with a divorce, while the other may not have even come to terms with the fact that the marriage is ending, let alone be ready to discuss divorce. In this video, I outline a few suggestions that may help if you find yourself in a situation like this.
Why I Do What I Do [VIDEO ]
Distribution of Your Home: The Options
{3:30 minutes to read} In my last video, I promised some creative win/win options that you could take when it came to the division of your home. Since they could be a little complicated and hard to follow, I thought it would be better to present them in a written blog.
Can’t Refinance Right Now
Let’s say that you both agree that there will be a buyout and a refinance, but it will take some time for the “buyer” to qualify for a loan, and the “seller” needs the money from the house to do the buyout. If there is an equity loan or other assets available, the seller could get enough funds as an advance on his or her share of the house equity to allow the move out.
If an equity loan is used, you would have to agree upon how to pay the monthly interest payments. The principal balance would be the responsibility of the buyer. In this scenario, the agreement will provide that the buyer will refinance in a set period of time, and if denied, perhaps have one or two more chances to refinance before a firm date is set for the sale of the home.
No Equity
If the mortgage is higher than the value of the home, the home can be a liability as opposed to an asset. In this situation, I’ve had couples either agree to remain in the home together until there is enough equity to sell the property, or one of them lives in the house and pays most of the mortgage and tax expenses, while the other pays something to be able to share in the equity of the house, once the mortgage is paid down enough to sell. I’ve had clients agree to this type of arrangement even though there is no spousal support to be paid and no minor children living in the home. The advantages are preserving their credit rating and ultimately, getting some equity from the home.
No Cash Flow to Move Out
Let’s say that you’ve agreed that mom can remain in the house with the children; both of you agree that dad should leave the home as soon as possible; but dad has limited cash flow to be able to pay the rent and pay support. If your budgets show that mom can pay expenses for the home and the children without monthly child support from dad, I’ve had clients agree that the monthly support amount — that dad would normally have paid — would be considered a credit against his share of the equity in the house. As a result, dad had the cash flow to move out and pay rent, while mom got to stay in the home with the children and not have to come up with the cash to buy out dad.
If someone is assuming the mortgage for any period of time, you will always need to discuss what happens if a payment is not made by the person responsible for the mortgage payments, as this can affect the credit rating of both parties. Also, the person who moves out but remains named on the mortgage may be unable to purchase his or her own home and qualify for a mortgage, so this will also need to be discussed.
When divorcing, making decisions about the marital home can be complicated and difficult, but when you work collaboratively with your spouse, much can be accomplished.
