We sat in the divorce mediator’s well appointed waiting room. Good cologne and flavored coffee mingled in the air. My then husband, Jeff, and I filled out separate forms attached to clip-boards. A Keurig coffee machine sat between us. Our drive over together was chatty and not entirely uncomfortable; a mixture of first date, sheep-to-slaughter and relief.
The initial form did not request much detailed information. I got the feeling its main purpose was to confirm our conviction regarding the dissolution of our marriage. It’s not easy to answer the question, Do you have any interest in reconciliation?, with a No. We had already been called on the mat with the same question by our last marriage counselor. FYI- saying it out loud makes your knees buckle and your stomach liquify.
Why Choose Mediation?
We chose to use a mediator for three reasons: 1. We thought we could make decisions quickly and amicably 2. It was way less expensive and 3. It seemed like a kinder and gentler path (neither of us could handle much more tension or conflict) that fostered future collaboration for the couple. We found the mediator through a friend.
Our mediator, James*, called us into the conference room. He shook our hands and offered us something to drink. All I remember from that initial meeting is my eyes welling up and making it difficult to see as we reviewed a sheet of paper describing mediation (keeps the decision making between the couple, mediator is neutral – does not represent either party, less expensive than attorneys, etc.). A comment made by James also stuck with me: Per the most recent studies, resiliency in children of divorce is based on minimal conflict and maximum cooperation between the parents.
Our mediation cost and legal documentation preparation altogether came to less than $4000.00. I believe the rate per session was $250 and our mediator said we could plan on four to six sessions. We used approximately six sessions. Obviously, pricing will vary based on the local market and duration of your process. We met weekly for the first few weeks and then the holidays interrupted us. We took our time getting back to it in January because we were waiting on year end balances from investment accounts. We could have been done with mediation in four months but it took us more like seven. Once mediation was complete, we had a document with all of our decisions in writing.
The court needs a legal document to be filed so at the very end of the process we had a lawyer draw up the paperwork with appropriate legalese. The lawyer and filing cost around $2000.00. Some mediators ARE lawyers and therefore you don’t need a separate individual to draw up your agreement. The lawyer has to represent one of you. The lawyer represented me in our case which worked out well. It is comforting to have someone look over the agreement and make sure you are not getting screwed. Side note: The lawyer said he was glad he represented me because he felt my husband’s financial savvy would have made it unfair for me to be unrepresented.
Creating a Budget for Your New Life
Our first assignment was to create an individual budget based on our current spending. This turned out to be a lot of work. We both felt like we had an extra part-time job for the week. It also was eye-opening. Holy Crap! We spend that much money? This budget is VERY important as it is the foundation for how expenses are shared and how spousal support (if applicable) is calculated. It is also very scary to see how much you are responsible for on your own. Line items in the budget include but are not limited to: mortgage/rent, health insurance, dental coverage, school/work lunches, Target runs, vacations, utilities, lawn care, groceries, eating out, auto ownership costs, magazine subscriptions, gifts, etc. It is thorough.
Also, all of your assets and liabilities are tabulated and divided up based on the decisions you make together. Cars, homes, jewelry, investment accounts, 401K plans, college funds for the kids and any other valuables in the home go in the asset column. Liabilities include credit card debt, mortgages, car loans, student loans, etc.
Child support is calculated based on both parents’ income, health and dental coverage costs, the number of children to be supported, childcare costs and the amount of time awarded to each parent. For more detail here is a link to the calculator for Minnesota. There is no income tax on child support. If either parent has an irregular paycheck this can complicate things. For example, my husband receives a year-end bonus that varies every year. It’s possible for there to be no bonus but it’s also possible for the number to be a significant portion of his take-home pay. This type of unknown allows for collaboration and creative solutions that will benefit the couple and their children in the future. Mediators help facilitate such discussions by suggesting plans they have seen work in the past and by keeping the couple calm and level headed. We ended up treating the bonus as a separate source of income not to be used in the child support calculation but to be split up in the way that we determined during mediation.
I like the term spousal maintenance or spousal support so much better than alimony. Alimony suggests a gluttonous pile-o-cash the money- hungry ex-wife tears from her poor doesn’t know what hit him ex-husband. Today, the ability of both husband and wife to work is scrutinized closely by the court. It doesn’t matter if you have been home with children for the last fifteen years or you still have young children at home. You could work and childcare costs can be split (which to me, seems like the child’s welfare is set aside in order to maximize earning potential, but I digress). It is also entirely possible that a woman be required to pay spousal maintenance to her ex-husband. Equal rights baby. So basically, spousal maintenance is a crap shoot. One common practice is for lifetime spousal maintenance to be paid to the lesser employed spouse if the couple has been married for twenty years or more. In our case, we had been married fifteen years. Our mediator said it was standard to receive spousal support for half the number of years you have been married. The number determined to serve as spousal maintenance payment is negotiated by the couple. In our case, we chose an amount that covered how much I would presumably (our best guess) fall short in the monthly expenses (based on the budget we created in the beginning). Another thing to keep in mind – the income tax repercussions. The spouse who receives spousal support will pay taxes on it and the payer will get a deduction because of it.
This is one of the more emotional decisions. It was hard enough for us to decide who would move out (my husband did), let alone decide what to do with the house. This could go so many different ways it’s hard to guide you. The home and its contents are huge negotiation pieces. Three things to keep in mind: 1.Whoever gets the house has to deal with upkeep alone — yard, roof, floors, cleaning 2. Taxes on the house and 3. Moving sucks. Kids see it as one more loss to grieve.
A common solution is for both parties to move out and divide the proceeds or liabilities. Unless the couple is enormously wealthy or desperately poor, maintaining the same standard of living for both parties is unlikely. Downsizing is practical for both financial and maintenance reasons.
I personally, would move into a condo or apartment in order to avoid all the maintenance but the kids want to live in a home in a neighborhood. So I’ll be a homeowner for approximately eight to ten more years.
All the Accounts – Things That Make Your Head Spin
As a stay-at-home-mom I was worried about qualifying for credit cards. I haven’t received a paycheck in over 12 years. I started saving all of those, You qualify for our premium credit card, pieces of junk mail. My advice is to set up your individual credit card accounts before the divorce is final. It is important to establish your individual credit rating. Institutions will consider child support, spousal support, investments (and their income or losses) and the balances you have in your accounts when deciding if you qualify for their credit card. For more details regarding obtaining a credit card click here. If you already, have a job and have a good credit rating, credit cards should not be a problem. Your limit my be reduced but you will have a card. Also, it will be necessary to stop using and shut down the joint account cards.
My ex-husband and I went to our local bank and set up individual accounts by taking money out of our joint account. This was no problem and the bank employees were very helpful. We maintained our joint account for the whole divorce process. It was very handy to use for all of the miscellaneous costs that came up from expenses incurred before our separation (utility bills, final payment for home remodeling) and bigger expenses that involved the kids (ex. new bikes to have at Dad’s house). Eventually, the joint account will run out or we will decide to shut it down and divide it up equally.
As a result of the new credit cards, bank accounts and impending divorce all of your bills that were attached to former accounts or your soon-to-be ex’s name through autopay will need to be updated.
I was as afraid of losing healthcare coverage as I was of paying the astronomical premiums I imagined insurance companies charged individuals without employers. Once I looked into it I felt better. Occasionally, spouses are allowed to stay on the same insurance with their ex-spouse. There is a law that an ex-spouse may maintain the same coverage through Cobra for up to three years. Of course, Cobra is MUCH more expensive but at least you have coverage if you absolutely need it.
I did a small amount of research to see how much a separate health insurance policy would cost me —a healthy 42-year-old woman. The monthly premium came to about $300 through Blue Cross with a $1000 deductible and no prescription or dental coverage (via Blue Cross/Blue Shield’s calculator) or $255 through Medica with dental and prescriptions and a $2000 deductible (per this health insurance finder).
I did not end up getting a separate policy so I cannot say I tested any of the above options. I ended up maintaining coverage through my ex’s employer. This seems like a tenuous setup (makes me nervous counting on his employment and the company’s open-mindedness)and I intend to secure my own coverage through an employer or individual policy in the not too distant future.
The divorce process series will continue next week. More of the personal side will be covered as I plan to write about the areas of divorce that involve the children.
How many couples stay together for financial reasons? At what point does personal peace become more important than financial status and fear of change?
- Divorce courts mirror society as more women pay alimony (news.yahoo.com)
- First One Over the Wall: What It’s Really Like to End a Marriage and Start Over (space2live)
- Let’s Not Reduce Everything to Numbers… (space2live.net) Everything you’ve built broken down into numbers during divorce, ouch!