Financial Impacts of COVID-19 in Divorce Mediation

covid 19 divorce mediation

Way back in March of this year, which to many of us feels like eons ago, we talked about the importance of addressing the potential financial impacts of COVID-19 in divorce mediation. With the pandemic still raging, unemployment high, and the damage to many businesses ongoing, now is a good time to look a little more closely at what this might mean.

If you are already participating in mediation, you likely have the mindset necessary to understand that the pandemic has presented unforeseen and even unimaginable consequences for many. This makes you uniquely suited to address these challenges. Even if you have not participated in mediation to date, however, this might be a good time to start working together to address any unanticipated developments.

You may have been close to settling matters immediately before the pandemic. Some divorcing couples even had their Marital Settlement Agreements (MSAs) ready to go. Others may have recently finalized a divorce. Now many are wondering if it is fair to have to carry out agreements that look much different in the light of a radically changed environment.

Depending on which stage of divorce settlement you are in, the options available to you will differ. Today we will talk about options for those who have not yet finalized their divorce. In our next post, we will look at what might be available post-divorce.

Common Financial Issues Impacted by COVID-19

As long as you have not yet signed your MSA and do not have a final judgment of divorce from the court, you are generally able to modify your agreement in any way you both see fit. You may want to take another look at your plans, particularly in the following areas:

  • Marital home buyouts
  • Business buyouts
  • Divisions of retirement accounts and other investments
  • Alimony
  • Child support payments

Marital Home Buyouts

In general, the pandemic has not affected real estate values as much as some people feared it might. Some city properties have taken a hit, as people seek to avoid crowds or transition to working at home. Suburban and rural properties, on the other hand, have benefitted from the same trends and are generally faring well. Even if your pre-COVID-19 appraisal has not changed dramatically, the financial impacts of COVID-19 may have changed other circumstances. Perhaps one spouse no longer has the means to buy out the other as planned. It is also common for a business buyout or an unequal division of retirement accounts or other investments to balance a home buyout. If the home has kept its value or even improved in value while the value of the other assets has dropped, then the entire distribution plan may need reassessment.

Business Buyouts

If a business has continued to operate at or near capacity throughout 2020, then a reassessment may not be necessary. On the other hand, if the business is a restaurant, a salon, a gymnasium, or another type of establishment that depends on an in-person clientele, the financial impacts of COVID-19 may have hit the business value hard. A business evaluation agreed upon in late 2019 or early 2020 will no longer be accurate. Depending on the business, an evaluator may be able to predict a return of value within the next several months. In many cases, however, this simply will not be determinable.

If both parties are willing to renegotiate, there may be a range of solutions. This could include a delay or restructuring of payments, or a delay in the distribution pending a future reevaluation.  If it is clear that a loss will never be fully recoverable, then a rebalancing of assets or of assets and support may be appropriate.

Retirement Funds and Other Investment Accounts

Many retirement funds and brokerage accounts saw severe drops earlier in the pandemic. Fortunately, most have at least to some extent recovered. In some cases, however, a couple may have needed to raid accounts to make up for lost income. There may also be more difficult times ahead. The full impact of climbing case numbers during the coming winter remains to be seen.

Problems could arise if a couple has agreed to pay one spouse a set sum out of an account which has decreased substantially in value. The reason for the decrease could be a significant factor in considering renegotiation. If the agreement calls for a percentage division, it is more likely to still be reasonable.


Agreements for spousal support can be renegotiated if either spouse has suffered a substantial economic setback. Consider building contingency planning into your MSA to prevent the need to return to mediation or go to court. For example, a payment schedule may begin at a lower amount than previously planned but include a step-up after a certain amount of time to account for eventual reemployment or a foreseeable recouping of business losses. Such contingency-planning will not be easy, of course, given the uncertainty of the future. Creativity and flexibility can be its own reward, however, in avoiding future costs. You can also include an agreement to return to mediation for future modifications before either party considers any court action.

Child Support

Child support agreements take into account not only parental income, but also the division of parenting time. Both factors may have been substantially impacted by the pandemic. Again, a renegotiation of child support that builds in contingencies to the greatest extent possible may be challenging but could also save time and money in the future.

If you have questions about renegotiating tentative agreements in divorce mediation due to pandemic-related events, one of our caring and experienced mediators can help. Contact us today for an initial virtual consultation.