Keeping It Real:Mediation's Power In Spousal Maintenance (Alimony) Cases
By Lawrence F. King, J.D., Colorado Attorney-Mediator
Family and Divorce Mediation's Underestimated Power in Spousal Maintenance (Alimony) Planning
Determining spousal support arrangements ("alimony" in federal tax jargon and
"spousal maintenance" in many states' and Colorado divorce law) is widely perceived as one of the
most challenging of issues in divorce. Many people underestimate mediation's
power in spousal support cases, because of the mistaken belief that a collaborative
approach will be ineffective in resolving what may be a complex divorce planning issue.
In fact, however, mediation offers powerful opportunities to design workable
spousal support arrangements for divorcing couples. Why? Mediation allows
participants to arrive at common assumptions, consider consistent data, and then
focus their problem solving on the real issue of each party's available
after-divorce cash flow.
Litigation's Abstract Bartering
Litigation of spousal support requires divorce attorneys to manage and prove much
information, including post-divorce income and expenses of both parties, and -
when they have minor children, the details of their parenting plan.
Divorce tax law
ordinarily complicates these tasks because spousal support payments are usually
deductible by the payor spouse and must be reported as income by the recipient
spouse. Especially given its adversarial nature, litigation often allows little
time to reach agreements as to basic assumptions of the parties' after-divorce
living circumstances. Without common assumptions, a mutually beneficial
arrangement including consideration of taxes cannot be explored.
As a result, in litigation, divorcing parties often negotiate with the hollow
exchange of payment proposals ("$1,000 month!" or "no, $400 month!"). In this
"payment auction" and bartering, neither party really understands the impact of
a given level of spousal maintenance (and child support) on their own
household's after-tax cash flow, or on the other party's cash flow!
Mediation's Ability to Provide Consistent Data
In contrast, an accomplished family or divorce mediator, or a single neutral expert used in
mediation, employs a cooperative approach with consistent approaches and common
assumptions - to reach an understanding of the parties' likely after-divorce
financial circumstances.
For example, in our office at Divorce Resolutions®, Colorado Center for
Divorce Mediation™, and with both parties
participating, standardized software (FinPlan's DivorcePlanner®) or a neutral expert's materials are used to
estimate the impact of support payments on after-divorce taxes. Our clients then
consider the resulting cash flow, often in several different payment scenarios
with their underlying assumptions (again, assumptions the parties have
collaboratively agreed to consider).
Mediation's Focus On the Real Issue of Available Cash Flow
With agreed common assumptions, and with the benefit of consistently created
data, divorce mediation focuses the participants squarely on what is a fair allocation
of net available cash flow, i.e.: how much available cash should each party
have, to meet his or her real world budget needs - after divorce, after
maintenance and child support, and after taxes.
With an understanding of their after-divorce available cash flow, divorcing
parties in mediation are freed of their "fear of the unknown." Spousal maintenance
("alimony") planning discussions then shift from "abstract bartering" to an informed
discussion of what cash flow appears fair for each of them, given their often
different household circumstances.
Conclusion
Fundamentally, the work of professionals in divorce maintenance
or alimony cases is to
assist their clients to develop a reasonable economic plan for their separate
family's futures. Managed well, the mediation process makes it substantially
easier - not more difficult - for parties to discuss and resolve spousal
maintenance and alimony issues in a durable, equitable fashion.
Ultimately, mediation's power in resolving spousal maintenance
and alimony cases issues lies
in its ability to keep the discussion real: with the focus on the bottom line of
each party's available after-divorce cash flow.
About the Author
Denver, Colorado family lawyer-mediator Lawrence F. King, J.D. is a full-time divorce mediator with Divorce Resolutions®, Colorado Center for Divorce MediationTM. For more information, visit the Center's award-winning Colorado divorce resources website, with its with free Colorado divorce tools and forms, "Best of the Net" child custody and parenting plans resources, frequently asked divorce mediation questions, and Colorado divorce laws news and information.
Larry can be contacted by phone at (303) 650-1750, or by E-mail.
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