In January, we reviewed some of the benefits of mediation for divorce. Last month, we looked at how mediation can fit in with other divorce processes. Continuing with our review of the basics in divorce mediation, today we are going to talk about getting ready. The first steps to take in preparing for divorce mediation are generally the same as the first steps you would take to get ready for divorce regardless of which process you plan to choose.
Identify Your Issues
Before you meet with your mediator for the first time, make a list of the issues in your case. These will generally fall into a few major categories:
- Property distribution. How will you divide your assets and debts?
- Spousal support. How you will decide if one spouse needs temporary or long-term financial support, and if so, how much?
- If you have children:
- Parenting plans. What kind of parenting arrangement will you follow?
- Child support. Who will pay child support and how much?
Each of these categories may have many subcategories, but focusing on the big picture can help you get things ready quickly. Under each category, make a note of anything that you and your spouse already agree on. If there are areas where you have strong disagreements, note that as well.
Collect All Relevant Information
Except for parenting arrangements, each of the broad categories above can only be resolved with a thorough understanding of your financial situation. You will need to gather information and collect documents that provide a detailed picture of your assets, debts, income, and expenses. Start getting ready for this by reviewing our mediation checklist.
In the rest of this post, we will focus mainly on the financial information you need to collect. In our next post, we will talk more about what kind of information is necessary to reach an agreement about child custody.
List Your Assets and Debts
Create a list of everything you own. This should include real estate, such as the marital home and any rental properties or vacation homes you may own; personal property, like furniture, artwork, jewelry, etc.; vehicles, such as cars, boats, and motorcycles; bank and brokerage accounts; retirement accounts; life insurance; annuities; cryptocurrency; and intangibles like royalties or patents. If you have a good idea of the value of an item, make a note of it. If you don’t, just put a question mark next to the item for now.
Next, make a list of all your debts. This should include mortgages, home equity loans, personal lines of credit, student loans, and any other debt. Include the current payoff amount for each debt.
Once you have completed both lists, break them into three categories: One for items you own together (marital property), one for items your spouse owns separately, and one for items you own separately. The general rule is that anything either of you acquired during marriage is marital property, and everything one of you owned before marriage is separate property. There are exceptions for inheritances and gifts from third parties, which are separate regardless of when acquired, as long as you have kept them separate. If you are not sure which category something belongs in, put a question mark next to it for now.
If you have a prenuptial or postnuptial agreement, this may override the general rules. You will need to bring any agreements to your first mediation session, along with your lists.
Document Your Income
The next step is to collect proof of income for the past three years. Include w-2 forms, 1099 forms, and tax returns. If either of you owns a business, bring business tax returns as well as individual returns. Other possible documents you may need include pay stubs, self-employment profit and loss statements, pension disbursements and social security statements, and evidence of alimony and child support payments received.
Create Detailed Budgets
Finally, you will need a detailed expense budget. Make a list of your ongoing monthly expenses, including payments for mortgages, car loans, health insurance, utilities, student loans, and credit cards. Add an average monthly amount for food, clothing, household expenses, transportation, auto maintenance, and any other recurring expenses. Break any annual expenses down into monthly amounts.
It is easy to miss things when going through this process. A good way to double-check is to compare your list with what you actually spent over the last year. If there are discrepancies, try to figure out why. Some people pay for a lot of things in cash without keeping records. If this sounds like you and you discover that you have a lot of unaccounted for cash purchases, think about what you generally do with cash. Do you buy groceries or other items with it? Spend it at restaurants? Do the best you can to reconstruct your spending and start keeping better track right now. Whenever you spend cash, write down the amount in a notebook and save the receipt.
Since your expenses will change after you divorce, it is important to also calculate a post-divorce budget. This is likely to include different amounts for housing, utilities, and food. If you have children who will be living with you at least part of the time, try to separate your separate budget from the budget that will include paying for children’s expenses.
Get Your Strategy Ready
As you are making your lists, focus on what it is that you want from the divorce. For example, do you want to keep living in the marital home? Does that still seem realistic after you look at the expenses that come with the home? Do you want to be the primary caretaker for your children? Does this depend on what kind of child support you could expect to receive?
It is crucial to a successful mediation process that both parties keep their minds open and approach negotiations with flexibility. Consider using things that are lower on your priority list as bargaining chips to gain things that are higher. And be careful not to base your priorities too much on emotions. Make sure that you are building a plan that will allow you to establish financial stability in your new single life.
Protect Your Physical and Emotional Well-Being
Getting ready for divorce mediation involves going through everything you have accumulated during your marriage and thinking about how you will now need to separate it all out. This can be an emotionally draining process. If you do not already have a therapist, you might want to think about getting one now. Even if you are surrounded with supportive friends and family, it can be valuable to have someone to lean on without having to worry about overburdening them with your problems. This is especially important if you are feeling intense anger or feelings of abandonment surrounding the divorce. For more tips on how to handle the stress of divorce, see How to Keep Your Emotions in Check.
In our next post, we will talk about what kind of information you need to create a good parenting agreement. Meanwhile, if you need help preparing for divorce mediation, contact one of our experienced and compassionate divorce mediators today.