Tuesday, August 07, 2007

Divorce Mediation & Whether to Divide It All Down The Middle

(Photo from Flickr)

One of the greatest benefits of divorce mediation is that although the laws regarding division of community property are generally clear (i.e., 50/50 for everything acquired during marriage regardless of whose name it's under), the parties themselves aren't required to follow those laws when entering into mediated settlements. While this is one of the same benefits of mediating civil disputes as well, it is sometimes harder for divorcing parties (or their attorneys or mediators) to take full advantage of this aspect of mediation whereas civil attorneys and mediators are generally more open to such alternative/creative options for resolving cases.

Because of the complexity of the Family Code, many gray areas can arise in divorce, including how an asset is characterized (separate versus community property), or how the asset is apportioned (e.g., what portion of the home or 401k is separate property and what portion is community property). Where there is disagreement between the parties regarding the facts or where the law could support different arguments despite an agreement on the facts, mediation is the ideal method for resolving these differences amicably and without litigation.

However, even in cases where there is little disagreement over the facts and little gray area for the parties to disagree about, mediation works very well for parties whose idea of fairness and equity may be different from the law.

The universe of options for resolving the financial issues arising out of a divorce are virtually limitless. In order to achieve their own version of fairness, parties can agree on a separation date that is different from what the court would decide. This one decision influences major issues such as characterization, apportionment and even spousal support.

Parties can decide that an asset (such as a 401k, for example) is going to be one party's separate property despite the fact that there may be a community portion and a separate portion because of the contribution of earnings to the 401k during marriage. Or parties can decide that although stocks were awarded to one spouse prior to marriage, and would therefore be considered separate property, because the parties lived together and supported each other in the same manner as they did once married, that it is more equitable to consider those stocks a community asset. Or that just a portion will be community property. Or a party can decide to waive his right to reimbursements he might be entitled to under the law because that's what feels right to him.

As the mediator in a divorce case, I discuss the relevant laws and how the local courts rule on certain issues but I do not ever give legal advice to my mediation clients. I require my mediation clients to obtain independent legal advice before signing the settlement agreements. When they meet with their attorneys (if they are not present at the mediation), each party already understands their rights and options and feels good that the agreement they reached is fair and equitable for their unique circumstances even if it is quite different from what a judge might order.

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