Mediating the Private Divorce – Let’s Make Peace!

This is from my recent LinkedIn Pulse article to answer questions from several readers:

Almost half of U.S. marriages end in divorce according to countless, long-term studies. The whole process of that is sad, uncomfortable, emotional, confrontational, extremely costly and sometimes, mean-spirited.

As story lines, “ugly” divorces get lots of TV, press, and movie coverage, but that’s not all. When carried out through the court process, divorces can get a lot of local exposure, too. Outsiders see the notice of filings in the newspaper and assume the right to comment. They readily weigh in on their beliefs about the marriage and divorce, dividing the couple’s friends, dealings with children, pets, and other family members. Then there’s the issue of separating their material assets. Outsider feedback on this topic is usually not helpful to the couple and may in fact, do more harm than good, adding to their mental stress and economic distress. But in the end, the assets and liabilities of the couple are part of open court records for the world to review. There is no privacy on things that should be private.

Here in alphabetical order are the most common assets divorcing couples must separate and which all were acquired or enhanced during the marriage. This is not an all-inclusive list and does not include inherited or gifted assets that were not commingled with the spouse:

• Life insurance cash values
• Retirement accounts, pension, or 401(k) values, IRAs
• Deferred Compensation
• Stock bonus plans
• Consumer debt (include credit card debts)
• Education loans
• Personal loans
• Mortgages
• Bank accounts and CDs
• Intellectual property – copyrights and patents
• Investments
• Personal property like household furnishings
• Jewelry
• Cars
• Real Estate
• Pets

That’s a lot (and just some) of your financial information which, once filed in court, is available to any curious person to find. Then they can and do comment to the divorcing parties (wanted or not), use as gossip, or even use to pursue you so that they may sell you something or offer some service aligned with the assets they now know you have. The public availability of your financial information is as difficult for couples who own little as it is for those involved in “high-stakes” divorces. How is that information available?

When a divorce is filed in court, generally, the law says that no changes can be made to the marital assets. (Although this can be waived.) This “freeze” on the assets makes it difficult for either party to dispose of or hide assets from the other before the divorce is granted. However, it also prevents both parties from keeping their asset division private, since the division will be filed in court and ruled on by the judge. Some filings and rulings are required to be placed in newspaper notifications. Others are entered into the court system as part of the record. Since our court system is open, the record is normally available to the public, should anyone be curious and go looking.

Once the court “freezes” the assets, neither party can change them, move them, reassign them, re-designate them or do anything to them at all except wait for the court to rule on what to do. Even with mediation, the couple can agree on how to divide the assets, but the agreement must be presented to the judge. The judge still must order the agreement to be carried out as specified. And once again, when something is ordered by the court, it usually becomes a matter of public record.

Mediation can help to reduce the “public” aspect of asset separation and enhance privacy for divorcing couples. So, how does that work?

Yes. Hire your lawyers, but either don’t file for divorce yet or waive asset freezing. Instead:

1. Choose a mediator with experience in asset separation for privacy and agree to hire her together. Agreeing on a mediator is a first step toward agreeing on settlement issues.
2. Create an inventory of all the marital assets. Make sure it is a complete inventory of all assets and have the items formally valued and/or appraised. Both parties must disclose to the mediator all the assets in their own names and that they hold jointly. Full disclosure is the couple’s primary hope of settling these assets amicably and privately, once and for all.
3. Schedule the mediation and start working on the agreement to settle the marital assets. The lawyers participate to advise their clients on what is legal and reasonable. First, both parties agree on how to divide the assets (who gets what). Next, they agree to a plan of action for assuring the assets are properly divided and the arrangement stays private.
4. When all is agreed, the parties carry out the action plan and legally separate their assets.
5. Once the asset separation is implemented, the petition for divorce is filed. The judge reviews and rules on the matter. Then the court order will show only that what is already in each of the parties’ names is what is owned by that party when divorced.

Both parties agreed to settle on taking only what is now in their own names. The written, signed agreement is made legally binding. What is X’s remains X’s and what is Y’s remains Y’s. The final divorce decree does not reference the mediated agreement, since there were no filings related to assets. Thus, there is no description of assets or any asset specifics in the public record. This type of divorce can only happen when there is full disclosure between the parties and no need for further discovery.

As most people are aware these days, mediation is a way for divorcing spouses to resolve the issues of separating their lives and assets with a neutral third party, the mediator. That mediator does not represent one party or the other. She is hired by both parties. Her responsibility is to focus on the shared interests of both parties. Many mediators (I am one) encourage divorcing spouses to each invite their attorneys to represent their own interests and assure each one has access to legal advice during the process.

Mediation sessions occur with all parties present in separate rooms. Mediating by video conference makes it simple, less expensive, and avoids physical, face-to-face confrontation. Separate meeting space for the attorneys is also a component of the process.

Divorce does require public court action to make it legal but mediation fairly negotiates the details out of court, saving time, money, and overwhelm for the parties and the courts. When done before a divorce is filed, mediation can also reduce the opportunities for public knowledge of (and interference in) their assets and the division of them.

That’s your question, Asked and Answered! Gale Allison

You can see the original article on LinkedIn here

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