Chapter 19 Negotiating and Finalizing the Best Possible Settlement

• Library: Divorce & Money (Nolo) (2020 Ed.)

CHAPTER 19: Negotiating and Finalizing the Best Possible Settlement

Have You Done Your Financial Homework?

Tallying Your Marital Balance Sheet

How Are the Offers and Counteroffers Made?

How Do You Finalize the Settlement?

Divorce Ceremonies

Until this stage of the divorce, you have focused on your personal, individual decisions—that is, the things you "want" in your divorce. But how will you get what you want? Through negotiation.

Negotiating a divorce settlement is a process of offers and counteroffers. You and your spouse may be able to compromise and reach a settlement easily, or your demands and those of your spouse may run headlong into each other. Some couples state their terms and reach a settlement in hours, while others go through years of bitter fighting.

Your settlement negotiations will probably bear an uncomfortable resemblance to the dynamics of your marriage. If your spouse has been rigid and demanding throughout your relationship, do not expect that you'll suddenly encounter flexibility and reasonableness in a settlement conference. Similarly, an uncommunicative mate will probably give you the silent treatment as you attempt to complete the settlement. Anticipating your spouse's most likely behavior can make it easier for you to accept and move through the negotiations.

Your decisions—and actions—become crucial in this phase, because you are playing for keeps. Once the settlement is final, it is costly, time-consuming, and almost impossible to modify it. Better to make changes to the settlement before you complete it, rather than try to alter it later.

In this chapter, you will address three basic issues regarding negotiating the settlement:

• Have you done your financial homework?
• How are the offers and counteroffers made?
• How do you finalize the settlement?

Remember that negotiation is the middle step in a longer process. You must communicate your needs and preferences clearly before negotiation begins, and you must be willing to compromise. Your negotiation should be guided by the acceptance that no settlement is perfect, for you (or for your spouse). Your goal is a settlement or judgment you can live with.

Have You Done Your Financial Homework?

Imagine walking into a room and sitting across a table from your spouse and your spouse's attorney. The attorney smiles while going through a long list of items that your spouse is prepared to "give" you if you will simply forfeit any claim to the items that are on your spouse's much shorter list.

The attorney points out that the dollar amount on the bottom line of both lists is equal. Surely you should agree to such a fair and equitable offer.

But should you?

You can't know whether or not the offer is fair unless you've done your homework. If you've worked through the previous chapters in this book, you should be able to accept or reject your spouse's offer relatively quickly. If you haven't read the prior chapters—analyzing your assets and debts, evaluating tax consequences, and understanding alimony and child support—you're apt to accept an offer that is a bad financial deal for you, regardless of how "equal" the dollar amounts on the bottom line appear to be.

You must know where you stand financially before you negotiate the settlement. We cannot stress this point enough. If you have not already done so, read the material relevant to your divorce from Chapters 12 (property and expenses), 13 (house), 14 (retirement plans), 15 (investments), 16 (employee benefit plans), 17 (debts), and 18 (alimony and child support). Even if your spouse has made an offer—or is preparing to counter an offer you've made—take no further steps until you have analyzed the financial consequences of any proposed settlement.

Tallying Your Marital Balance Sheet

In Chapter 12, you filled out the detailed "Assets and Liabilities Worksheet." Now, as you reach the crucial point of your negotiations, that attention to detail will pay off.

You can now devise your "Marital Balance Sheet," a key tool in arriving at a settlement. With the information you've assembled, achieving a fair division of the assets and debts—the goal of every divorce proceeding—should be infinitely easier.

Refer back to the "Assets and Liabilities Worksheet" in Chapter 12. Make note of what property is jointly owned or owned by the spouses individually. Note also the equity or legal value in the last column. Then enter that information in the appropriate columns below. This will be a bit of a chore, but it's important. This is what you've been working toward.

Once you've entered that information, take a moment to study the overall picture. Think about which assets you want to keep and which ones you want to be rid of or are willing to give up. Bear in mind that what each person gets will also be an important element in deciding what, if any, amount of child support and alimony is ordered.

Begin by preliminarily dividing the property as you would ideally like to see it divided. First, consider which property each spouse would prefer to have and "deserves" to have. For example, if the equity or legal value of your house is $150,000, and you and your spouse each contributed...