Divorce Mediation: a Financial Perspective
| Jurisdiction | Colorado,United States |
| Citation | Vol. 13 No. 9 Pg. 1650 |
| Pages | 1650 |
| Publication year | 1984 |
1984, September, Pg. 1650. Divorce Mediation: A Financial Perspective
Divorce mediation is a topic which is receiving increasing attention from lawyers, mental health professionals and the general public. The establishment of the National Institute for Dispute Resolution in 1983 and the passage in July of that year of Colorado House Bill 1506, the Dispute Resolution Act, have given momentum to the emergence of what may become a viable alternative to litigating or adversarially negotiating marital dissolutions.
A review of the literature on the subject of divorce mediation indicates that there are a variety of issues being studied and debated: Does mediation reduce court dockets? Are there cost savings that may be realized by the legal system? Does the mediation of certain aspects of a divorce constitute the practice of law? Who is qualified to mediate and how should mediators be trained and regulated? As with any developing concept, the list of issues to be resolved is long. The general focus seems to be on custody, the social and psychological benefits of mediation, the impact of mediation on the legal system, the mechanics of resolving disputes, perceptions of fairness and compliance with the agreements. Interestingly, very little attention has been given to the financial considerations and benefits that can be achieved through mediation.
Because of the emotional nature of divorce, financial matters often are not resolved objectively and efficiently. Fears of "losing everything" or "not getting enough" cause the parties to take positions and make demands which may seem to be in their respective best interests, but actually are not. Hiding or dissipating assets, incurring debt and trying to limit the other party's options are examples of "strategies" based on the attitude that for one to win the other must lose. The result is a reduction of divisible net worth, economic security and comfort for the family as a whole.
The opportunity to identify and meet the true financial needs of the parties through careful, creative planning and problem-solving is one which springs from cooperation. By preserving assets, avoiding needless debt and expense, creating options that maximize the utility of all financial resources and minimizing taxes, there is more to be divided between the parties. Cooperation benefits everyone.
This article discusses the role of financial planning in dissolving a marriage, points out some of the negative results of handling the financial aspects of divorce by adversarial means, outlines a method and some of the benefits of mediating and identifies certain elements which suggest that mediation should be considered.
A dissolution of marriage results in the dismantling of one financial system and the construction of two separate ones. Systems require balance. Financially, it is important that both parties receive appropriate portions of assets and debt, income and expenses. Each new system should be structured to provide for risk and tax minimization and to ensure that education, career and retirement needs can be met. As complex as financial matters have become, the family law practitioner or mediator is now faced with the challenges of deciphering pension and other qualified plans, valuing securities and real estate, calculating present and future values and weighing myriad tax considerations. Of course, all of this must be accomplished in addition to handling the domestic and legal matters as well as the negotiations and the trial. Too often, there is insufficient time or training to allow the practitioner to handle the financial aspects properly. Unfortunately, the results, which may not be immediately evident, can be quite costly for the parties.
Constructing a financial system with the necessary proportions and balance...
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