division of assets and liabilities

5 Steps to Negotiate Equitable Distribution

Money. We love it. We struggle with it. We fight about it. Money touches some of the deepest recesses of our being, the tender spots where insecurities dwell. We fear we won’t have enough, even when we have always had enough to survive in the past. We want to be respected and valued for what we provide and to demonstrate good stewardship. We know money is a useful tool, but it can also be the root of all evil and equated with power. Here are some suggestions to overcome the obstacle of money in your divorce.

How to Win at Divorce

How to Win at Divorce

Divorce bites.  It’s the end of the happily-ever-after story that a couple starts long before their wedding day.  It’s no picnic.  But there are ways to succeed at the process and make it less horrific.

Family Money Matters

We’re in the midst of some radical changes in the spheres of marriage and employment. In the twentieth century, social policy in the US was based on the idea that a family consists of a married couple with a breadwinner (Dad) and a stay at home parent (Mom). Within the past 30 years, marriage lost its dominance as the main way women make money and support their children. Nevertheless, it’s still seen as the “default’ mechanism for many families, particularly those on the two extreme ends of the financial spectrum. The two most likely groups of married women to stay at home are those married to men in the top 5% of earners who don’t need to work and women at the other end of the scale who have low earning prospects and therefore can’t afford to work.

As a custody mediator, I often see young people, particularly women, in my office who are in that second category. Typically these women have little education and few job prospects of their own. They usually hook up with someone who has a fairly low-income job. When they get pregnant, they “chose” to stay home with their young children because they can’t find jobs that pay enough for them to put their children in childcare. But then the pressure and stress of unemployment and poverty makes it more likely that their relationships deteriorate.

Now their relationship is ending and the limited financial support they had from their partner is decreased. They will get child support (hopefully) but that is barely enough to support the children. The parent’s expenses are not covered. So they have to piece together bits of moneymaking activity when their children are at school or can be watched by someone else.

In family financial mediations, I help couples equitably divide their assets and liabilities. Together we create columns for accounts and real properties that we then place under one or the others’ name. We divide the credit card bills, auto and school loans. At the end of this, a question often lingers about where each person goes from this point forward and what the future will look like. It’s impossible to equalize their earning potential in my office in an afternoon. It may have taken years to develop the inequity and it may never reach a place of balance if the couple is middle aged or beyond. While alimony takes a stab at addressing this inequity, most alimony settlements fall short of truly creating life-long financial balance, and it can’t even touch the less tangible values of work and career.

Obviously we can’t go back in time. If we could, I would tell these young people not to get themselves into that position in the first place, to stay in school and to build the skills and experience that allow them to be employable throughout their lives.  And no one wants to plan for the demise of their relationship when they are just starting out.  Nevertheless, about half of all marriages DO end in divorce and the figure is even higher for low income marriages and non-married parents.  So, I encourage new parents to consider their skills, experience and education like a bank account. If their relationship were to end right now can they balance the account so both people have (roughly) equal earning potential? If not, what needs to be put in place so that they walk away with as much income-earning ability as their partner?

This is likely to involve some serious conversations. Rather than just focusing on income and who can make more money right now, or taking the path of least resistance, I encourage parents to consider and discuss all options and then make conscious agreements about their family financial structure. This includes:

  • Desire & Aptitude –What do each of you really want to be doing? What are your natural skills? Are some better suited for staying home while others more profitable?
  • Continual Education & Experience – The parent who stays home with the children needs time to take classes, volunteer, or hold a part time job to attempt to keep the balance sheet balanced.
  • Sharing Responsibilities – In order to prioritize both parents’ careers, the parent who works outside the home will have to take care of more work at home. And, the parent who is at home has to allow and encourage this.
  • Time Frames – Consider alternating who is the primary breadwinner. Make a decision to do what you’re going to do for 1 or 3 years then to renegotiate.

For parents who are separating or see that in their future, it may be too late to balance the income-potential spreadsheet, but it’s not too late to plan for the future.

  • Develop a custody agreement that allows for both parents to work and build their careers. This will ultimately support the children’s long-term financial care.
  • Avoid remarrying immediately. Marriage helps out in the short run, but may impede a person from building a career path if it results in repeating the stay at home scenario.
  • Work as a team with the other parent. Building a career takes flexibility and support. The other parent will need to by your ally.

It's All in the Timing

Every person going through a transition experiences their own timeline.  The challenge with divorce, of course, is that the timelines of the two parties may not be aligned.  Here in North Carolina, law dictates that we take at least one year between the date of separation and the final divorce.  This imposed timeline has little meaning to a broken or an impatient heart.  We move on when we’re ready to move on. 

A lovely couple I saw this spring was splitting after about 5 years of marriage.  They had a young daughter whom they both cherished.  The wife originally contacted me.  She had initiated the break up and was energized by the idea of settling their affairs and moving on.  The husband agreed to meet in mediation and so we began.  We met about 5 times over the course of several months.  At each session, the wife came prepared, with a notebook of ideas.  In between sessions, she made the calls or developed the plans they agreed upon previously.  The man showed up often unprepared or reluctant.  As I got to know these two, I watched the woman move the man forward gently, asking something of him and then waiting until he was ready to make that move.  I saw him let go of some of his “demands” (such as no new romantic partners for the first year) as he came to accept his new reality.  Eventually, they developed an elegant parenting plan.  They divided their assets and their debts with a fine chisel.  Having the opportunity to follow up with them, I’ve learned that they are co-parenting their daughter beautifully. 

Consider what might have happened if they had taken a more traditional path.  The woman might have opted to find a lawyer who could get her out of the situation as quickly as possible.  She might have withdrawn money from their shared account to demonstrate their separation.  The ma might have felt betrayed and lost in this and lashed out by suing her for full custody or accusing her of some type of foul play. 

This early phase of separation is a sensitive time.  Plans need to be made and matters need to be settled, but often one person is grieving heavily and is not ready to make those types of decisions. I encourage anyone going through this to practice patience and seek constructive advice.  Find a mediator or collaborative attorney who can answer your questions and allow for these dual paces.  Refuse to be pushed into an adversarial position because of someone else’s timeline.  Expect that you will hit bumps along the road and you will need to pick yourself up and keep moving.  Avoid comparing your pace to anyone else you know who took a different path.  Remember, it took a while to get yourself into this relationship; it will probably take a while to get yourself out.