Dividing stuff in divorce–What’s in the marital pot?
“In Hollywood, an equitable divorce settlement means each party getting fifty percent of the publicity.” – Lauren Bacall
Celebrities may fight over the spotlight. The rest of couples worry how this divorce will affect the assets they’ve spent years working to gain.
Confusion over the stuff terrifies people. Will they lose Grandma’s hope chest? Their pension? The chance to retire before they die?
Finances prove challenging. But, a little knowledge eases fears. A good mediator helps clients understand their financial picture. Explains the options available. Helps clients create a fair and equitable agreement.
Rather than “dividing assets” couples use their assets to create stability for both.
Key points the mediator will help clients understand:
What’s in the marital pot?
In Indiana–the marital pot includes everything each spouse brought to the marriage and everything acquired until the day the Petition for Dissolution (or Legal Separation) is filed.
The student loan. The car. The interest in the family farm. It all goes into the pot.
How do we fairly divide our pot?
There are as many answers to this question as couples facing divorce. Key considerations include:
- What will it take for each of you to be financially stable after the divorce?
- If you have children, how do you ensure each parent can care for the children in their home?
- What benefits does one spouse provide that the other now needs to replace?
- What are the historic ties to specific assets–i.e. Grandma’s hope chest or the family farm?
- What feels ethically right? Most people want to walk away with a clear conscience. What arrangement allows for that?
What can we do to make good decisions?
- Prepare a budget. People make poor decisions in a vacuum. Concrete numbers clarify options and make decisions easier. Prepare a budget that includes all assets, all debts, and all monthly expenses.
Hear the “all” in all monthly expenses. Include the specialty coffee, the allowance for the kids, and the splurges on clothing. Creating a bare bones budget that doesn’t realistically mirror life only sets couples up to fail. An honest picture sets the stage for making sound decisions.
- Create a life plan. Does one person need to go back to school to re-enter the workforce? Does another need to downsize to live within means? What will the children need after the divorce?
Creating a specific plan for the next stage of life for each of you brings focus. Rigid positions melt away. Strategic decisions emerge to accomplish the plan for both spouses.
- Be open to creativity. Many believe fair means 50 – 50. Sometimes it is. Often it is not.
Many fear losing half a precious asset–their pension, their business, or their inheritance in the family farm. When the focus shifts from “splitting” assets to funding the next stage of each person’s life, creative options open. One person can keep their pension in tact by giving a larger share of a different asset to the other.
The key question becomes–how do we use the assets we have to best serve the futures of each?
One example. A couple faced the challenge of wife needing to go back to school in order to support herself after the divorce. How could she financially survive in school? Husband desperately wanted to keep his 401 K in tact, so he resisted paying her half the pension.
Husband was a contractor. He built a duplex. He took out a mortgage to cover his costs. He transferred the duplex to his wife in the divorce and agreed to stay on the mortgage for five years. They leased half to a tenant to cover the mortgage. Wife lived in the other half rent free. Five years later–degree and credit score in hand, wife refinanced the mortgage and released ex-husband from his liability. She had housing and got her new degree. He kept his pension. They both moved toward financial security.
When couples look at the resources they own as tools to fund their future, they find creative solutions.
Mediators help couples going through divorce understand their financial picture. See their options. Make decisions for their best futures.
If you are contemplating divorce and want help to create a secure future, call 317-344-9740 or email info@TheResolutionCenterIndy.com. We offer free consultations to help you explore your options and choose the best path. We look forward to serving you.