Mediation and the Family Home – Part II

In our last post we talked about mediation and what to do with your family home during your divorce. Whatever you decide to do on a temporary basis, however, if you are like most couples who choose mediation, it will not be too long before you need to move on to making a final decision about the home.

Options for the Family Home in Divorce

The most popular alternatives for what to do with a family home on final judgment of divorce include the following:

  • The parties immediately sell the home and divide the proceeds.
  • One spouse keeps the home and the other immediately receives other marital assets to offset the value.
  • One spouse “buys out” the other with a contract providing for installment payments over time.
  • The parties continue to own the house jointly for some predetermined length of time during which one spouse keeps exclusive possession of the home. The time often extends until the youngest child reaches a certain age or leaves for college. At the end of that period the parties sell the house and divide the proceeds.
  • The parties continue to own the house jointly for a predetermined length of time while the children stay there and the parents alternate living there (nesting). After the children have reached a certain age, the parties sell the house and divide the proceeds. The children then start spending time at each parent’s new home.

Mediation Provides Maximum Flexibility

If this decision is left to a judge, the judge might award the home to one spouse, or might order the parties to sell it and divide the proceeds. While judges sometimes order more creative solutions, they do not usually have the time to consider all potential alternatives. The beauty of mediation is that it leaves the two of you free to consider all possibilities and then spell out the details in your Marital Settlement Agreement. Mediation also allows you to consider issues that may be closely intertwined with the home at the same time. These can include questions about employment, other assets, and/or children’s needs.

Emotional Attachment Can Fuel Mistakes

Many people have an emotional attachment to the family home. It is important not to let such feelings get in the way of reaching common sense solutions that will be best for your future. Common pitfalls to avoid when deciding what to do with a family home include the following:

  • Thinking that all assets are equal.

    • Chris and Sarah have $325,000 in joint pre-tax retirement assets; $50,000 in cash; and a home currently valued at $425,000. They purchased the home several years ago for $300,000, and it currently has a $200,000 mortgage balance. Sarah proposes that she take the house with the mortgage and $75,000 of the retirement assets, leaving Chris with the remaining retirement assets and the cash. While this technically gives $300,000 of value to each party, it is not really an even exchange. Money in the retirement account will not be taxed until withdrawal and will then be treated as ordinary income. If Sarah needs to sell the home in the future, however, she may have to pay capital gains tax on some of the increase. For example, on a sale for $750,000, there would be capital gains tax on about $200,000 ($750,000 – $300,000 basis – $250,000 single homeowner capital gains exclusion).

  • Not planning adequately for future needs.

    • Another consideration for a spouse who is thinking of trading away retirement assets for a home is the difficulty of rebuilding retirement assets. A larger home is nice to have, but losing retirement assets can set a mid-career person back many years in preparing for the future.

  • Failing to consider the true costs of keeping a home.

    • Sarah is committed to keeping the home, even though selling it would give each spouse a net of $112,500 to spend on rent or on the downpayment for a new home. Sarah does not want to rent or downsize, and since the mortgage payment on a new smaller home would be almost as much as the current mortgage, she believes that it makes more sense to keep the current home. There are a few things, however, that she has not considered, including the following:
      • The property tax on the smaller home would be at least $200 per month lower.
      • The utility payments on the smaller home would also be about $200 per month less.
      • Maintenance expenses on the smaller home for things like painting, etc. would also be lower.
      • Renting would eliminate the property tax and most of the maintenance expenses completely and would also result in lower utility costs.

A Financial Professional Can Provide Valuable Help

Scenarios like the one above often require the assistance of a financial expert to estimate the true future value of each asset. A financial specialist in a divorce case is usually an accountant or financial planner who has completed additional training in resolving common divorce issues. The expert may have a certification, such as “Certified Divorce Financial Analyst” (CDFA). If you and your spouse have chosen mediation, you can decide whether it makes more sense for each of you to use your own financial planner or to hire one joint expert. A joint expert will help both of you understand the potential tax effects and other financial implications of your planned property distribution and other financial aspects of your divorce.

if you and your spouse are ready to work on the final disposition of your property in divorce, contact one of our caring and experienced family law mediators today.

 

Mediation and the Family Home

In our March post, we talked about getting ready to resolve financial issues in divorce mediation. Today we will talk about how mediation can help you decide what to do with the family home while your divorce is pending. Read more

Benefits of Mediation for Divorce

Benefits of mediation

Happy New Year! We hope you have had a chance to rest, recharge, and prepare for whatever is to come in 2023. If one of those things is divorce, we also hope you took our suggestions last month about New Year’s resolutions. Read more

Does Nesting Fit into Your Parenting Plan?

Nesting is a parenting arrangement where separated parents alternate living in the family home while children continue to live there full-time. It is usually a temporary plan that can provide children with stability while parents transition into their new lives as single people. Some couples also choose nesting during a period of separation which they believe may be temporary. Read more

Mediation and Legal Custody

Under the New Jersey custody statute (N.J.S.A. 9:2-4), parents begin with equal rights. A court can, however, order any custody arrangement it determines to be in the best interests of the child (N.J.S.A. 9:2-4(c). Joint legal custody is the most common arrangement. Sole legal custody, which grants one parent the right to make all major decisions, is far less common. Legal custody is not necessarily related to physical custody. Sometimes parents also share physical custody equally, but often the child lives with one parent most of the time. Read more

Domestic Violence and Mediating Divorce or Parenting Disputes

October is National Domestic Violence Awareness Month – a good time to review exactly what domestic violence (DV) is, how to recognize warning signs, and when couples with a history of DV may want to consider divorce mediation. Violence between romantic partners is also sometimes called intimate partner violence (IPV). This term can be more specific than domestic violence, which technically refers to violence between any household members. The term “violence” is also sometimes used as a catch-all to refer not only to physical violence, but also to psychological manipulation and abuse. The latter can be much more difficult to recognize than physical violence. Read more

Estate Planning in Divorce Mediation

Couples going through divorce mediation often wish to consider financial matters beyond immediate spousal or child support and property division. Two issues that commonly come up are college planning and estate planning. Not only can such issues impact divorce negotiations, but many divorcing couples are approaching them for the first time and will benefit from the support of a mediator during the process. Even if you already have an estate plan, you will generally need to revise it during divorce. Read more

Reducing Conflict in Mediation by Leaving Blame Behind

The New Year is finally here, and many people are more than ready for a new start. If your new start includes moving forward with your divorce, it might be time to take a look at the level of conflict between you and your spouse. High conflict can make mediation less successful, but there are some ways to address this. If your conflict level is high, it might be worthwhile to consider what lies beneath that conflict. Is it based on rational disagreements? Or is it mainly fueled by anger and blame? Once you have answered these questions, you can consider whether or not there are steps you can take to reduce the conflict. Start by asking yourself where you fall on the following spectrum:

  • Low conflict
    • Neither of you blames the other for your marriage ending, and
    • You agree about all or most aspects of your divorce settlement.
  • Moderate conflict
    • One or both of you may blame the other for the divorce, but neither of you believes that this should impact your divorce settlement in any significant way, and/or
    • You have some disagreements about your marital settlement plan, but they are minor, and you believe that you can work them out.
  • High conflict
    • One or both of you blame the other for the divorce, and
    • You have marked disagreements about your post-divorce parenting arrangement, your property distribution plan, and/or the need for one of you to pay spousal support to the other.

How Conflict Affects Mediation

While it is true that high conflict can make mediation less successful, it is also true that the process itself tends to reduce conflict. Starting off with relatively high conflict, therefore, does not necessarily mean that you should give up on the idea. If you can succeed in lowering the temperature of your interactions, you are likely to benefit from the lower expenses, faster time frame, and vastly reduced stress that mediation can offer. How can you do this? The first step is to look more closely at what is going on. Notice that the categories above identify two distinct types of conflict. Differentiating between these is often the key to success.

The Cycle of Blame

The first kind of conflict is interpersonal and is based on blame and anger. Couples who have low or moderate conflict overall generally understand that blame in a divorce tends to be counterproductive. Even if one spouse did, in fact, do something egregious, the other does not want to focus on this and prefers to focus on the future instead. Couples in the high conflict category, on the other hand, tend to actively blame each other. Typically, one spouse believes that the other cheated on them, lied to them, or abandoned them in some way, and uses this to deny parenting time, demand more alimony, deny alimony, or complain about the division of property. The blamed spouse reacts defensively to these provocative moves and tries to turn the blame around onto the other spouse.

Sometimes both spouses blame each other from the outset. Regardless of how the cycle begins, however, it tends to escalate once a divorce is in progress. One spouse might file a fault-based complaint alleging that the marriage failed due to the other spouse’s misconduct. Proving this requires producing evidence of the misconduct. Even if the complaint does not specifically allege a fault ground for the divorce, there are likely to be affidavits full of aspersions against the other spouse. Once the mudslinging has begun—even if it was justified at the start—it becomes hard to stop. The cycle feeds on itself.

Resolving the Cycle

The point is not that blaming your spouse is “wrong.” In many cases, blame is justified. The point is that holding onto the blame is likely to be counterproductive for you. If all you want is for your spouse to acknowledge that they wronged you and apologize, then by all means, ask for that. If you speak authentically from your heart, you might even get it. Or you might not. Either way, the next step is to ask yourself what is best for you. If the answer is that letting go of your anger will benefit you, but you just can’t seem to do it on your own, then individual therapy can help.

If your spouse is the one caught up in blame, you have a harder task, but there are still things you can do on your own. Therapy might help you limit your reactivity and learn better responses to the escalation of conflict. It can be surprising how much a mutual cycle of reactivity can change for the better even if only one party decides to change.

Separating Rational Disagreements from Blame

The second kind of conflict is different. It is based on realistic disagreements with the other spouse. Couples experiencing this kind of conflict usually understand that the division of property should be fair, that support payments should be based on one’s party’s need and the other party’s ability to pay, and that parenting agreements must be based on the best interests of the children. They simply disagree on what is fair, on who needs what, or on what is actually best for those children. Simply having many disagreements about these types of issues does not make mediation a poor choice. In fact, the more complex your divorce is, the more you stand to gain by staying away from the high expenses of the courtroom.

The problem for many couples is that the two types of conflict tend to intersect. If you are focused on blaming your spouse, it can be difficult not to see everything the spouse proposes through a lens of feeling victimized or of wanting to punish the spouse. Couples who are not focused on blame find it much easier to commit to keepings things amicable and fair.

If you are having a lot of trouble coming to an agreement, it might be time to reassess the degree to which blame might be coloring things. You can then take steps to move forward.

Considering a Structured Process

If, in spite of all your efforts, you and your spouse seem hopelessly locked into anger and blame, you still might not have to give up on mediation entirely. You can look into trying a more structured mediation process.  Start by finding a mediator who has experience working with high conflict couples.   Look for someone who:

  • Offers or encourages pre-mediation coaching,
  • Promises to insist that participants stick to ground rules,
  • Will keep participants focused on making proposals and counter proposals that address well-defined issues,
  • Is willing to meet separately in caucus with each participant as often as necessary,
  • Understands how to help correct any pre-existing power imbalances, and
  • Is comfortable with higher attorney participation if that should prove necessary.

Pre-mediation coaching can improve your communication skills and ability to maintain composure under emotional stress, as well as to set and stick with firm personal boundaries. Ground rules and caucuses exist to help participants move forward without getting caught up and bogged down in emotional turmoil. Attorney participation can help everyone focus on the law and separate real issues from reactive responses.

Are you wondering whether or not divorce mediation is right for you? One of our caring and experienced mediators can help you decide. Contact us today for an initial consultation.

 

The Mediation Process: How to Finalize Your Divorce

Finalizing your divorce

Finally, the day has come. You have hammered out all of your issues and your mediator has drafted a Memorandum of Understanding (MOU). Are you finally done with your divorce? What happens next? If you are both happy with the MOU, then you are almost at the finish line, but not quite. You still have a few loose ends to tie up before you can finalize your divorce. Read more

Choosing a Mediator and a Consulting Attorney

how to choose a mediator

If you have been following this blog for the past few months, you probably have a good idea of whether or not mediation is a suitable process for your divorce. You probably also have a good idea of whether or not you are ready to start the process. Maybe you are planning to take steps like pre-mediation coaching, or maybe you feel ready to get started right away. At this point, most people start to think about choosing a mediator and  a consulting attorney. Read more