The Division of Assets and Debts During a Divorce
How Mediation Can Help you Divide These in a Way That Makes Sense to Both of You
Whether you have $10K or $10M in assets, the division of marital assets does not necessarily determine how much your divorce will cost you. The divorces we see on television, with high priced attorneys and high powered experts, do not have to be the rule, but the exception. Divorce mediation offers a unique perspective on the dissolution of a marriage and the division of marital assets. That perspective focuses on the bases of assets, not the quantity of the assets.
It is the mediator's job to assist their clients with an equitable agreement based on what they have, what they owe, and what their needs are for the future. Mediators are paid the same hourly rate regardless of what your net worth is. Their prices don't go up for wealthy clients, but they do go down for those who need it.
Most people will agree that the only people who win when divorcing people fight over money are the lawyers and experts they hire to put on a production for a judge. In Illinois alone, millions are spent every year on unnecessary litigation, millions that were earned by the clients and should rightly be theirs to divide. Choosing mediation can eliminate these wasted dollars and put them to use in securing both parties financial futures.
However, it is important to remember that mediation is not right for everyone when it comes to dividing assets and debts. When faced with clients who don't care about money and will spend everything they have to "win" or who only wishes to see their spouse financially ruined, mediation may not be the right choice. Sadly, emotions and attorneys seeking to assign a fee as high as possible can turn an otherwise peaceful and easily agreeable clients into mortal enemies. If this happens to just one party to the divorce, a mediated and cost-effective divorce is not likely to occur.
Taking the emotions out of a divorce, often with the assistance of a therapist or coach, can make even the most complicated financial aspects of a divorce conducive to mediation. Additionally, by mediating, you are exercising control over how your assets will be split and who will be involved in the process. By choosing mediation, you can eliminate the need for time consuming litigation, battling financial experts, and spending much of your hard earned dollars on questionable procedures.
Lastly, mediation is beneficial when it comes to eliminating debts and making sure that debts with both party's names on it are resolved. If both party's names on a debt such as a house, credit card, or car loan, it will take both creative thinking and cooperation to work out a resolution.
Trying to eliminate marital assets and debts prior to the divorce is essential to insure a smooth divorce. Some examples are: marital home selling, refinancing, or a buy one spouse out of their equity to remove one party from the title, credit cards, medical bills, car loans, bank accounts, and investments. These are assets and debts that are subject to division prior to divorce. There are other assets that can only be divided after a divorce is finalized by a judge. Retirement benefits and sometimes pensions are such assets.
The division of retirement benefits requires what is called a Qualified Domestic Relatives Order (QDRO). This QDRO, signed by a judge, is the document which instructs the administrator of your retirement benefit as to how your benefits will be divided and where the agreed upon amount or percentages are to be directed. A divorce is the only way that funds can be taken from retirement benefits and transferred to another's retirement account (IRA) without penalties or taxes. Depending on your individual administrator, you may have to fill out a simple form which is signed by a judge for the transfer. You can save money by completing the form and submitting it to the judge yourself. Most importantly, once the judge signs the QDRO it is up to you and your spouse to see that this form reaches your administrator and is carried out.
Pensions, however, have their own special rules and every company has specific regulations. Frequently, pensions need to be "valuated"-a term meaning that a pension expert calculates the value of the pension for the years you were married, arrives at a total, then, based on the plan's regulations, informs you what the other spouse it entitled to. Most pensions have no value until actual retirement occurs and payment cannot begin until that time.
In mediated divorces, it is often helpful for the pension holder to keep 100% of the pension and give their spouse assets equal to the value of the pension. It is not a hard and fast rule that assets must be split 50/50. What matters most is that the division is equitable.
Equitable distribution of assets is the final point I would like to make. In mediated divorces, this "equitable distribution" of assets is sometimes the key to a peaceful and conflict free divorce. A calm and orderly divorce allows each person the financial ability to get on with their lives much quicker than simply relying on a 50/50 division of marital assets. Sometimes more creative solutions like selling or refinancing the marital home and the distribution of those proceeds can avert future financial complexities.
A skilled divorce mediator can help divorcing couples find the best way to navigate the murky waters of divorce. In the low stress atmosphere of mediation, finding the fairest solutions is a lot easier than doing it with lawyers, paralegals, and financial experts.I urge you to consider mediation if the circumstances arise-you can save a great deal of money, headaches, and heartaches by consulting a qualified and compassionate divorce mediator.
ABOUT THE AUTHOR
Brian James, President of C.E.L Associates, focuses on helping divorcing couples end their marriage as amicably as possible. His organization handles mediations for all family and community disputes. They are conveniently located throughout the Chicago suburbs and offer services in Northern Illinois and Southern Wisconsin. Brian strictly adheres to mediation services that are professional and maintain the utmost confidentiality for all clients. Helping people resolve their disputes in a non-adversarial way, Brian saves wear and tear emotionally and financially.
He can be contacted by phone at (312)524-5829 or or Visit Web Site
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