Before you can even begin to define what a fair negotiated settlement looks like, you need to understand the main elements that make up a divorce settlement agreement in the first place.
There are countless issues that need to be determined in the divorce process, but the 4 major subjects to negotiate and resolve in divorce settlement discussions are:
Parenting plan and child custody (parenting time);
Child support and related expenses
Alimony / maintenance / spousal support / spousal maintenance (determining if it applies and if so, the amount and duration);
Marital asset and liability division and determining which assets are considered either the couple's marital property or a spouse's separate property.
Let’s take a closer look at the things to consider in a divorce agreement and types of issues that need to be decided within each of these categories:
1. Negotiating a Divorce Settlement: Parenting Time and Child Custody
As parents, you know there is nothing more valuable than time with your children.
Unfortunately, in a divorce settlement, unless you retain full custody of your children (and I’m guessing your spouse won’t find that fair), you’ll go from seeing them every day to being a part-time parent.
And that can hurt.
On one hand, you want to spend as much time as possible with your children. On the other hand, your spouse is a good person, an "all-in" parent, loves and is devoted to them. So you want the kids to spend as much time with them as possible, too.
Reconciling what's fair when it comes to parenting plans and child custody are no doubt among the most difficult decisions you'll have to face when it comes to your divorce matter.
And since there are no laws or guidelines around what it means to be a good parent or how you should structure your parenting plan, it can get tricky to figure out how to get a fair divorce settlement and what that really looks like for you, your soon-to-be ex-spouse and your kids.
2. Divorce Settlements and Negotiating Child Support
Federal law requires that each state have a set of child support guidelines for providing divorcing parents with an idea of how much financial support their children need in order to live happy, healthy lives post-divorce.
Notice I said guidelines and not formula.
That means when it comes to determining a fair child support agreement, it’s really up to the parties (the two spouses).
But here’s the thing... It’s not the two of you that this primarily financial issue is about. It’s about your children - and what’s fair to them. Not what some federally mandated guideline dictates.
To determine what's fair to your kids, you and your spouse will both need to consider in your divorce settlement how their lives looked like before you decided to divorce.
And what you’ll both need to do as their parents, to try to keep it that way after your divorce.
If there is one topic that causes more questions than answers when it comes to what’s fair in a divorce settlement, it’s alimony - also known as spousal support, maintenance or spousal maintenance depending on where you live.
Unlike child support where there’s at least a starting point for discussion generated by a software program, when it comes to alimony, no such software exists.
Sure there are “statutory factors” and other similarly vague dictums but in very few cases does a calculated alimony formula exist. And even those are subject to negotiation.
So how do you come to terms both the paying spouse and the receiving spouse find fair when it comes to alimony?
If you're not careful, you and your spouse could find yourselves in divorce litigation in family law court going back and forth and around and around on this challenging issue forever with no fair resolution in sight.
4. Negotiating Division of Your Marital Assets and Marital Debts
There are two methodologies used when dividing marital assets and liabilities in a divorce. Where you live will determine which methodology applies in your divorce case.
When it comes to dividing a marital asset or marital debt if you live in an equitable distribution state, the parties (you and your divorcing spouse) are to come to a fair, but not necessarily equal, property division.
Whereas if you live in a community property state, the parties are to divide marital property equally.
The reality is, whether you live in an equitable distribution or community property state, you and your spouse can negotiate what a fair marital settlement agreement would look like in your particular case.
Meaning, if you negotiate, you can choose to divide your marital assets and liabilities in a fair but not necessarily equal manner.
At first you might think, "That's great as we'd much rather decide how to split our marital assets and debts on our own instead of being told by a judge in court what to do."
But you have to be careful as how to get a fair property settlement in divorce can be difficult!
First, there’s the magic phrase, “fair but not necessarily equal.” How does a divorcing couple decide what that means? Is it 50-50? 60-40? Or some other split? And who gets the short end of that stick?
How do you account for the impact of pre-tax versus post-tax assets, or ones that change in value frequently versus those that don't?
Your financial settlement might have looked fair the day you negotiated it. But then the market took a nosedive, and now your share of the property division is worth far less than it was just a few short days ago!
Then there’s the other interesting tidbit about “marital assets and liabilities.” What’s in and what’s out of your discussions around splitting assets are just as important as coming to a fair settlement in divorce in the first place.
What if you owned a house before you got married and used the proceeds from the sale of that real estate to buy the home you now live in?
Or you started building your retirement accounts right out of college, long before you got married. Now it’s worth a great deal of money. Do you have to share all of it? Some of it? None of it?
This divorce settlement negotiation that's fair thing is starting to look like a myth.
Or is it?
What Can You Do to Ensure You Get a Fair Divorce Agreement?
So who decides the settlement in divorce proceedings?
Since there are little or no laws or specific guidelines on how to resolve many of the parental and financial matters described above, you can see that there's lots of room for interpretation of what's fair.
But there is a way to negotiate a divorce settlement with your spouse that's fair.
Use divorce mediation to negotiate an agreement with your spouse that's fair.
It's a divorce method that enables you to create an equitable divorce settlement that's fair to both of you because it's a product of your own decisions and agreements.
And instead of you and your spouse trying to negotiate on your own, or having to hire your own separate divorce attorney to negotiate for you, choose to work with an expert divorce mediator who possesses the skills, knowledge and expertise to successfully guide you and your spouse through a fair divorce negotiation process.
Mediation is the Best Way to Negotiate a Fair Divorce Settlement!
The choices you make before you start your divorce are critical.
Regardless of the length of your marriage, whether you're the one who wants the divorce, your spouse does or you're both on the same page, the choices you make before you start your divorce will likely set the tone for how the entire divorce process will unfold for you and your children.
And how peaceful, fair, child-focused and cost-effective your divorce will (or won't) be.
But you can only make smart choices if you take the time to get educated and prepare for divorce first.
That's exactly why we created an on-demand kit for smart people like you - to help you do just that!
Joe Dillon, MBA is a professional divorce mediator and founder of Equitable Mediation Services. Joe is passionate about helping couples avoid the destruction of attorney-driven litigation and specializes in helping couples resolve the issues required for divorce -peacefully, fairly and cost-effectively. When he’s not mediating, you can find him exercising, cooking, and watching Cubs baseball.