At the end of 2017, Congress passed, and the president signed into law a sweeping tax reform bill. Among the numerous changes was one that significantly affects divorcing couples. As of the end of 2018, alimony/spousal support is no longer tax deductible for the payor spouse, and support payments are no longer taxable for the recipient spouse. This means that the payor spouse now has to earn more money to pay the same amount in spousal support.
The tax changes with regard to spousal support have made it more difficult for attorneys to negotiate a settlement. The previously used “cookie cutter” formulas that used to apply to this issue are no longer available, and Congress did not provide any real tradeoff in exchange for taking away this deduction.
Now, since there are no clear guidelines around how to compensate for this change, the only viable solution is for attorneys to work within their clients’ specific circumstances and budgets to understand their real needs. This can be challenging during an adversarial proceeding, however, where both sides have their defenses up, and the goal of the legal counsels is to “win” more concessions on behalf of their clients.
How Divorce Mediation helps Overcome Financial Challenges
Without the ability for payor spouses to deduct alimony payments, many divorcing couples need a more innovative approach to handle spousal support and other important financial matters. This means taking a deep dive into the overall financial picture to identify ways the couple can reach a solution that makes sense for both spouses. As a divorce mediator, this is what I have already been doing for years!
Divorce mediation, by its very nature, he is a much more cooperative approach to dissolving a marriage. Spouses are able to work out the terms and conditions of their divorce through a process that is guided by a neutral, third party mediator.
Although the mediator guides the discussion, spouses are ultimately in control of the outcome, and no agreement can be binding unless both parties agree to it. During this confidential process, spouses are able to speak more freely and bounce ideas off of each other that can bring them closer to a win-win resolution.
For couples with more complex financial situations, we have partnerships with experienced financial experts who can help the spouses make sense of these complicated issues and often identify more creative approaches to successfully resolve them. By understanding all the options that are available to the couple, spouses are frequently able to develop mutually beneficial settlements that would be difficult to accomplish in a court setting.
Divorce mediation provides several other potential benefits as well:
- The process can typically be completed at a fraction of the cost of traditional divorce litigation;
- The process can usually be completed much sooner than a traditional divorce;
- The cooperative environment provided by divorce mediation allows couples to settle their divorce more amicably;
- Since spouses control the outcome of the mediation process, they are much more likely to take ownership of the final settlement and adhere to its terms and conditions.
For couples in all tax brackets, divorce mediation provides a viable alternative to litigation that can successfully address spousal support and other important financial issues. By working together with the parties to understand their financial needs, we are often able to come to a peaceable and workable agreement with realistic support amounts.
This time of year, a lot of people have New Year’s resolutions. Most of them have something to do with how they will improve their lives. Examples include “eat healthier”, “lose weight”, “start a business”, “pay off debt”, and “put away enough of a down payment to buy that dream home.” Some people have a different kind of New Year’s resolution; to end their marriage.
It is an annual phenomenon that the number of divorces tend to shoot up right after the calendar turns and we begin another year. There are a couple reasons why this might happen:
Many spouses decide to postpone a family breakup until after the holidays “for the sake of the children.”
For some people, the aftermath of the holiday season triggers the divorce. They endure another holiday with a spouse who is inconsiderate, treats the kids and their family members unkindly, and for them at least, takes all the joy out of what should be the “most wonderful time of the year.”
Divorcing at the beginning of the year often makes sense for other reasons as well. This is the time when people are looking for a “fresh start”, and what better time is there than right after the New Year to end a marriage that is clearly not working and start a new life as a single person or with someone else?
There are financial considerations as well. For example, divorce can have a profound impact on the tax situations of both spouses. 2018 might have been an exception to this for some couples because of the end of the alimony deduction for payor spouses. But in general, it is better to dissolve a marriage closer to the beginning of the year so both parties have ample time to get their finances in order for tax season the following year.
The Benefits of Mediation for a New Year’s Divorce
If divorcing is one of your New Year’s resolutions, you may want to consider mediation rather than traditional divorce litigation. Divorce mediation is an increasingly popular alternative to going to court, because it allows couples to dissolve their marriage more affordably and efficiently.
Mediation provides several advantages over litigation, these include:
Lower Cost: Mediation can typically be done in just a few sessions, and it can often be completed at a fraction of the cost of litigation.
Time Savings: Court-initiated divorces can take several months up to a year or longer to complete. Mediation can often be wrapped up within a few months or less.
Amicable Resolutions: Mediation is conducted in a collaborative environment where spouses work together (through the guidance of a neutral, third-party mediator) to resolve their differences amicably. The process is designed to produce peaceful and workable settlements that both parties can live with. This helps preserve delicate family relationships, which is especially important if there are kids involved.
Flexible Settlements: Though divorce mediation is facilitated by the mediator, the spouses are in control of the outcome. Settlements cannot be imposed on either party; both must agree to them, or they will not be legally valid. This allows spouses to take ownership of the process and develop resolutions that work for their unique situation. And because the spouses are the ones in ultimate control, they are more likely to live up to any agreements that are reached.
Confidential Process: Divorce litigation becomes part of the public court record. Mediation, on the other hand, is a private and confidential process. This means that nothing that is said during the sessions can be used against either participant in the future.
Divorce mediation is not for everyone. This is a voluntary process that can be ended at any time without an agreement. For this reason, spouses need to be committed to making the process work. This does not mean they have to agree on everything; in fact, it is totally fine if there are issues that you and your spouse don’t see eye to eye on. It just means that they need to be willing to act respectfully toward each other and make reasonable compromises for the overall benefit of settling their differences without the need for a costly, protracted, and potentially combative litigation proceeding.
Every human deserves the same amount of dignity and respect when facing a divorce. In a situation where a partner in a heterosexual relationship comes out as a member of the LGBTQ community, there can be a lot of added challenges to the dissolving of a marriage. Mediators with experience in with these types of situations have the versatility and skillset to navigate this process smoothly and develop a workable and peaceable solution both parties can be satisfied with.
Mediation involving a member of the LGBTQ community is just like any other type of divorce mediation. A mediator schedules the sessions at a time and location that is convenient for all participants. In addition, the mediator works with parents of children (if the couple has children) to keep the parents working together to support them. Litigation can bring out stressful sides in both partners and turn them against each other. Mediation works to promote discussion about what is best for each partner in the separation, as well as what is best for the children.
Mediators work with both parties to make the separation as amicable and cost efficient as possible. They work with couples to determine the distribution of assets, as well as child custody and scheduling parenting time between both parties. Highly skilled mediators often have experience working with other types of special cases as well, such as divorces where the separation is long distance and other divorces with higher assets. They understand that each situation is unique, and they are able to tailor solutions based on the specific needs of each couple.
After a spouse comes out in a heterosexual relationship, it can become a highly stressful and damaging situation. Fear, anxiety, and confusion can fill the tension between the two partners. Mediation is a highly effective way of handling these situations, because mediators are accustomed to working with relationships of all types. By bringing together the spouses into the decision process, mediation also gives participants far greater control over the outcome, making it more likely that the spouses can part ways on good terms.
Mediators settle divorces in both heterosexual and homosexual relationships, and have the experience needed to help people from all different backgrounds feel comfortable and satisfied. Mediators can maintain quiet and confidential meetings with both parties to determine what is best for each of the partners in the separation, as well as their children and assets. Mediation works at a personal level, looking beyond the sexual orientation of the person and focusing on their feelings and what will be best for them.
Relationships today are flourishing and evolving in so many ways. Divorce for LGBTQ members in heterosexual marriages requires professionals who are able to adapt and evolve their communication skills to work with such relationships. Mediators have the flexibility to handle this evolution, and they can cater to the needs of any individual, no matter how they choose to identify.
Couples with significant and unique assets that want to get divorced often believe it will cost them a fortune to dissolve their marriage. This is certainly the impression most legal professionals would like you to have. After all, a high net worth divorce
usually means you are dealing with complex assets; such as stocks, bonds, real estate, family-owned or closely-held businesses, retirement accounts, and even foreign investments.
When spouses with a high net worth go to hire a divorce attorney, the attorney usually wants several thousand dollars down to hire them on retainer. The presumption is that it may turn into a long, drawn-out court battle and/or countless hours of negotiations to settle the property division. It does not have to be this way.
The Divorce Mediation Alternative
Traditional divorce litigation can get expensive for any couple, no matter their financial situation. However, if the spouses are willing to work together using a collaborative rather than combative approach, they can settle the marriage dissolution amicably and for a fraction of what they would pay to litigate the case in family court.
Divorce mediation is an increasing popular alternative to litigation, and many couples have been able to use this process successfully. Here are some of the advantages of mediating your divorce:
- Cost-Effective: Divorce mediation sessions are typically far less costly than hiring an attorney and going through a trial.
- Faster Completion: With mediation, your divorce can usually be completed with just a few sessions. This allows you to finish up the process and move on with your life.
- Confidentiality: Unlike litigation, the mediation process is private and confidential, and nothing that is said during the sessions will ever become part of any public record. This is especially important in today’s age of information leaks and mass social media distribution.
- Flexibility: With mediation, participants control the outcome, and they are given the freedom to get creative and develop solutions that are tailored to their specific situation. This is difficult to accomplish in a courtroom environment.
- Respectful Process: As mentioned earlier, mediation is a collaborative approach in which participants work together to resolve their differences. This type of process is much more likely to result in a peaceful and workable settlement.
Can you Really Mediate a High Net Worth Divorce?
One of the most common myths out there regarding mediation is that it cannot work for couples with significant assets because the issues are just too complicated. Nothing could be further from the truth. Mediation can work just as well for high net worth couples; in fact, sometimes it is easier to settle high asset divorces because the wealth and income sources the spouses possess are more clearly defined.
When things do get complicated during divorce mediation, outside experts can be brought in to handle various aspects of the divorce. These may include CPAs, appraisers, business valuators, actuaries, and other financial specialists. Working together with the mediator, these experts are able to help resolve more complex issues that high asset couples often face, and still complete the process far more quickly and cost-effectively than with traditional litigation.
Mediation is commonly used in the corporate setting to resolve employee disputes, develop operating agreements and other types of contracts, and to resolve disputes among partners, shareholders, and other key members of an organization. While mediation can be highly effective for workplace conflicts, one often overlooked use of this process is to add it as an Employee Assistance Program (EAP).
Mediation Services as an Employee Benefit
In the past few decades, one of the major concerns among employers has become the health and wellness of their employees. Numerous studies have been conducted highlighting the benefits of workplace wellness programs. Most experts agree that Employee Assistance Programs (EAPs) that emphasize wellness produce a positive return on investment, perhaps as high as $2.50 to $4 for every dollar invested.
Typically, EAPs include healthy living incentives, telehealth services, counseling, and access to financial and legal assistance, among other services. Implementation of these programs has been shown to lower absenteeism, increase employee productivity and job satisfaction, reduce turnover, and foster a happier and healthier overall work environment.
Adding mediation as an EAP can enhance the positive affects of these programs by giving employees access to a solution for personal conflicts. We all know that it can be difficult to concentrate on work when you are struggling with personal issues. These struggles can have a negative effect on employee attitudes and cause them to take out their frustrations on co-workers.
When mediation services are added to the list of EAPs, employees with personal conflicts have access to a service that allows them to resolve their conflict rather than just cope with it. Oftentimes, the average person is not aware of solutions such as mediation, and when they have a serious conflict in their personal lives, they often believe that the only option they have is to take legal action.
What is Mediation?
Mediation is a form of dispute resolution that can often be used as a viable alternative to litigation. The process is facilitated by a neutral, third-party mediator whose job is to guide the discussion toward a mutually beneficial resolution. Mediation is voluntary and non-binding, and although the mediator is in charge of the process, participants control the outcome. The mediator has no authority to impose a resolution that is not agreed upon by all participants.
The Advantages of Mediation
Employees can use mediation to resolve virtually any personal conflict they are dealing with. This process is often used successfully for divorces, separations, estate settlement, elder care, and other family legal matters.
There are several ways employees can benefit from mediation as an alternative to going to court. These include:
Saves Money: Legal battles can become expensive very quickly. A case that goes to court can cost participants thousands of dollars, putting a major strain on their finances. Mediation can typically be completed at a fraction of the cost, which is highly beneficial for all parties involved.
Saves Time: A court case can take months or even years to resolve. Mediation can be over in just a handful of sessions. It should also be noted that even the most complex issues, including high net worth divorces, can be resolved with minimal time and cost using mediation.
Process is Confidential: Litigation becomes part of the public court records, which can be another source of stress in the age of Facebook, Twitter, and other social media channels. With mediation, the process is kept private and confidential, and there is never any worry that the words of the participants will be used against them in the future.
Promotes Amicable Resolutions: Mediation is conducted in a cooperative rather than combative setting, which promotes more peaceful settlements. The ability of employees to resolve issues quickly, amicably, and cost-efficiently makes them happier and more productive at work.
When HR departments consider Employee Assistance Programs (EAPs), mediation is not usually the first thing that comes to mind. Offering access to this service can be a major benefit for employees, however. And since this would usually be offered as a voluntary benefit in which the employee would cover most or all of the cost, employers can provide this benefit with very little extra expense for the organization.