The Advantages of Divorce Mediation

As financial planners, we are sometimes called on to assist with some of the sadder events in life – for example, death, disability and divorce. Today I'll focus on divorce, and on the advantages of mediating your divorce rather than going the more expensive routes of litigation or 'collaborative' law.

Although there are separate designations that purport to signify specialization in divorce financial planning, there are none with the rigor and breadth of knowledge required of the CFP^® designation. Divorce-specific issues in financial planning are relatively few, and can be addressed by any Certified Financial Planner™ professional familiar with the basic state rules regarding child support, maintenance, and the 'equitable distribution' of assets. Software is readily available to the planner that will run different financial scenarios for these, and help you to see the differences between them in cash flow, net worth, taxes, and so on.

So perhaps you’re considering separating…or already have. It’s rare for both spouses to come to a decision to terminate their marriage at exactly the same time. However, once one of you is convinced of the rightness of that decision – or accepts its inevitability – it is not only wise but necessary to proceed with the business of having your separation legalized. Many people rush headlong into adversarial litigation, each hiring separate attorneys to advocate for them on the many difficult decisions that they face. Often, conflicts are escalated as each party tries to “win” a better deal at the expense of his or her former partner. The couple is often ordered not to speak directly with each other, but only through their attorneys.

“Collaborative” divorce still requires hiring two attorneys, who will meet with you and your spouse together and help you work out an agreement; unfortunately this is sometimes no less expensive than a fully litigated divorce. If the “collaborative” process doesn't work and the divorcing couple chooses to litigate, they must then hire a different set of attorneys.

Mediation is a cooperative process in which you and your spouse will work with the help of a neutral third party to come to your own agreement on all issues that must be decided. These may include child custody, parenting schedules, equitable distribution of assets, awards of spousal maintenance, child support, and others. (Note that this is not about court-ordered mediation, but about a process into which both parties enter freely and voluntarily.) The mediator is someone who has completed comprehensive family and divorce mediation training (including a domestic violence component) and can help you work your way through the process, often with the help of a Certified Financial Planner™ professional doing the financial analysis.

When compared to the traditional litigated divorce process, divorce mediation is:

• Less expensive. The cost of a mediated divorce is estimated to be only 25 to 40 percent of the cost of an adversarial divorce, and sometimes much less.
• Less time-consuming. A typical mediated divorce can be accomplished in four to eight weeks, versus months or even years in litigation.
• Less emotionally difficult. Rather than working against each other, you and your spouse will be working cooperatively toward an agreement that is equitable to both of you. This will preserve your ability to work together in the future as parenting partners, and reduce the residual resentment and anger that usually accompanies the win-lose litigation process.
• More dignified. Mediation strives to protect the self-esteem and dignity of all parties. Rather than looking back to assign blame, mediation looks to the future and enables both of you to begin your new lives in full control of the outcome.

According to Katherine Stoner, an attorney on the training staff of the Center for Mediation and Law in Mill Valley, California,

“Many adversarial lawyers have little or no experience with the non-adversarial approach used in mediation. Some even disapprove of mediation, arguing that divorcing spouses should not negotiate on their own but only through lawyers. These attitudes are slowly changing, as divorce lawyers become more aware of mediation and its benefits for their clients. Meanwhile, spouses wishing to mediate their divorce need to find consulting lawyers who are 'mediation-friendly.¹”

At the conclusion of the mediation process, you will have a complete Memorandum of Understanding ready to be reviewed and filed by the “mediation-friendly” attorneys of your choosing. This will eventually be filed with the court and be as binding as any other divorce decree. However, mediated settlements tend to have a higher compliance rate because the husband and wife have designed the agreement themselves.

The biggest reason that mediation works is that you are able to build your own agreement with the guidance of one or more trained professionals, with “the shadow of the court” as a motivator. Please note that neither collaborative divorce nor mediation is appropriate if there is a history of domestic violence.² In that case, the court and the isolating effect of opposing counsels can offer a more protective environment.

Sources:

http://www.nolo.com/legal-encyclopedia/divorce-mediation-myths-30191.html

http://www.nycourts.gov/ip/adr/divorcemediation.shtml

By FPA member Tim Sobolewski, CFP^®, The Financial Planning Center, Amherst, NY and Wendy Pegan, LMHC, Creative Relationship Center, Amherst NY.