Finances in Divorce Mediation
Divorce is generally one of the most stressful and expensive times of a person’s life. But it doesn’t have to be. Your life is in upheaval emotionally and financially. Your mind probably isn’t clear and you may be throwing money at “professionals” who you think you may need. The most important tools we have during this difficult time are time and knowledge. Time to see clearly and not make rash decisions and knowledge to make those decisions wisely. Your finances are one of the most important issues during this time.
I tell my clients what to expect before we start and the more prepared they are, the smoother the process is. Before every mediation, everyone fills out a financial disclosure form. The financial disclosure forms spells out a couple’s assets, debts, incomes, and expenses-basic finances. Knowing these things before mediation empowers the parties to make rational decisions. Also, coming to the table with all the facts elicits confidence and mutual cooperation. When both sides are transparent it relieves some of the tension. Also, I find that a financial agreement that is brokered collaboratively between the exes will likely be more successful in practice than one imposed by a disinterested judge.
Filling out a financial disclosure form doesn’t have to be overwhelming. It’s a step-by-step process that anybody can do with the right tools. First, it’s wise to take an accounting of all the couple’s finances- assets and debts. Common items that typically constitute a marital estate include bank accounts, vehicles, real estate, stocks and bonds, retirement accounts, and brokerage accounts. Second, it’s crucial to determine any tax liabilities or credits that may arise from prior tax returns. Since most married couples file jointly, any money they may owe the government from previous tax returns, or conversely, any money owed to them must be taken into account in the divorce settlement.
Another important area to consider when filling out your financial disclosure form is the value of items that may be more difficult to ascertain. For example, how is your spouse paid? Are payments every two weeks or are they deferred? It is also extremely important to have records of all your financial documents. Crucial to an accurate financial disclosure form are tax returns, paychecks, credit card statements, bank statements, social security statements, insurance policies, mortgage documents, wills, car titles, investment statements, and retirement accounts.