In Part VI of “Up Close and Personal,” our divorce mediation case study series, we watched Derek and Stacey reach several major decisions regarding distribution of their marital property and debts. As we rejoin them, they are returning to their third mediation session after a break. During the break they reviewed some charts that their mediator, Ms. Smith, made up to illustrate the property division. She asks if they have any questions. Let’s see what happens next…
“My only question is about the retirement,” answers Stacey. “Why are we keeping it separate from the other assets like that? Couldn’t I just use retirement funds to buy out Derek’s share of the house?”
“Well you could,” answers Ms. Smith, “but the value of a retirement asset isn’t necessarily equivalent to the value of other assets. Also, my understanding is that you can transfer retirement funds to a spouse during a divorce, but the money has to go into the spouse’s retirement account to avoid penalties. It’s very important for retirement transfers to be handled correctly, and since this plan already has you making a transfer to balance the retirement funds, both of you will definitely need to discuss this with your attorneys.”
“Okay” says Stacey “I was just curious. Interest rates have been so low that I would probably rather refinance and keep more of my retirement money anyway.”
Since they have no other questions about the distribution, Ms. Smith suggests moving on to discuss child support. She asks Derek if he has found his own place yet.
“Yes. I actually moved out right after our last meeting, so over a month ago now.”
“How is the equal-time parenting schedule working out so far?”
Derek says that it’s been going well, and Stacey agrees. “It isn’t ideal, but it’s okay. We talked about whether or not alternating weeks would be easier, but I think the schedule we have now is better—especially for Ethan because he’s only eight and doesn’t like to be apart from either of us for too long. This way he doesn’t have to go more than five days at a time.”
“Okay, great.” says Ms. Smith. “Let’s look at the New Jersey Shared Parenting Worksheet. I have all your income and expense information here. The expenses going forward will need to be updated now that Derek has an apartment and Stacey is planning to refinance the house, but we really only need the income information to fill out the child support worksheet. We can estimate taxes. Stacey’s income is pretty straightforward because she is paid as an employee. Her salary is about $85,000. Derek’s is a little more complicated because he is self-employed, but your joint financial expert has taken a look at that and added back some standard deductions and provided a three year average. My understanding is that you have agreed to go with his figures. Is this correct?”
Both of them nod assent. “Okay, then we are going to use the average of $48,000 per year for Derek. I also have an average amount of $220 per week for your child care expenses, and it looks like you have health insurance for the children provided through Stacey’s employment at a cost to her of about $30 per week. Is all that accurate?”
Again they both nod.
“Then there is just one other thing we need to decide. The Shared Parenting Worksheet requires one parent to be designated as the “Primary Parent of Residence” or “PPR.” Usually this is the parent a child spends more time with; when time is divided equally, it’s the parent a child lives with while attending school. Since you are actually splitting weekdays though, we are just going to have to choose a PPR.”
“Well, what does it matter?” asks Derek. “Why don’t we just flip a coin?”
“The way this works,” explains Ms. Smith, “is that the New Jersey Child Support Guidelines cover three kinds of expenses: “Fixed costs,” which include housing, utilities, furnishings and household care items; “variable costs,” which include food and transportation, and “controlled costs,” which include clothing, personal care, most entertainment expenses, and other miscellaneous expenses. The Shared Parenting Worksheet gives each parent an allowance for the first two types of expenses, but not for the third type. The assumption is that the PPR will purchase items in the “controlled” category. Some parents who share custody equally decide to keep the PPR in charge of those purchases. Others decide that they are going to have to duplicate some things and so they make an additional adjustment. Keep in mind though, that if you duplicate items, your total costs will be higher.”
“Well this is easy then,” Stacey begins. “Except for gifts, I’ve pretty much always bought all the kids’ stuff, so I should be the PPR.”
Derek looks uncomfortable. “That is true,” he agrees, “but how would that work? If we’re sharing time it doesn’t really make sense for them to bring everything back and forth all the time.”
Stacey thinks about this for a moment. “Well look. Your new apartment is really close, so I do think they could bring a lot of things back and forth. We really don’t want to be duplicating things unnecessarily, because our expenses are already much higher with two places to live. I’m happy to let them keep some clothes at your place though, and if there are a few things they really need two of, we’ll just address those things individually. Looking at our incomes, it looks like I’m the one who is going to be paying the support, so I also feel like it’s fair for me to have some control over this.”
Now Derek looks exasperated. “That’s typical, Stacey, because you always need to have control over everything.” He throws his hands up in the air. “But that’s fine. I don’t really want to take money from you anyway, but I might need to for a while, because keeping two separate households is going to be ridiculously expensive.”
Stacey looks upset. “Don’t even think of asking me for alimony,” she says. “You know perfectly well that you could be earning a lot more money if you just put in a little more effort.”
Derek rubs his eyes. “Look I have no plan to do that, but to be honest, I’m exhausted, and I’m not sure I can think straight anymore. We’ve done a lot today so maybe we should finish this up next time.”
“Okay,” Stacey says, “but can we schedule another session right away? I want to keep moving forward.”
They all agree on a date two weeks away. Ms. Smith suggests that they may want to meet with their attorneys before the next mediation session for feedback on what they have accomplished so far and answers to any other questions that they have. “Especially if there is an alimony issue here,” she adds. “We will want to be ready to address that next time.”
Will Derek change his mind and ask Stacey for alimony? Stay tuned to find out in our next installment, coming soon.
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