your divorce!

 Preparing for Divorce: Part Two

By William H. Donahue Jr

Transitions Mediation Center

Now that you know the three groups of issues that most divorces raise, here are some concrete steps to acquire or maybe just organize the information you will need to resolve those issues intelligently, fairly and in a way that will meet your needs long into the future. 

Parenting

One of the most important things you can do is read articles about children and divorce. There has been a tremendous amount of research on how to help your children get through a divorce. You will be surprised that many of the ideas and preconceptions you hold may not be correct. Sometimes what parents do with the best of intentions is not what’s best for their children. In this case, it will take some time, but the more you know, the better you will be able to negotiate a parenting plan that is in everyone’s best interests.

Assets and Debts

The most important thing you can do is create an inventory of assets and debts. Put a value on everything. This may include a market analysis of your home or an appraisal of investment properties. Traditional pensions often have to be valued by experts, which is not difficult or expensive to have done. And there are appraisers who can help you put a value on anything from a piece of jewelry, a work of art, to a business.

In most cases, assets include the following categories:

* Real estate including investment properties, land, some timeshares, options to buy

* Financial assets like bank accounts, stocks, bonds, investment accounts, stock options, royalties

* Vehicles and vehicle type assets including cars, motorcycles, boats, RV’s and other recreational vehicles

* Retirement accounts including pensions, annuities, 401(k)s, 403(b)s, regular and Roth IRAs, and many variations on these types of accounts.

* Personal Property mainly includes household furnishings, art, collectibles, clothing, electronics, sporting goods and jewelry.

* Businesses

In most cases, debts include the following categories:

* Mortgages and home equity loans and lines of credit

* Vehicle loans

* Student loans

* Bank and personal loans including from friends or family

* Loans drawn from retirement accounts

* Credit cards

 The bottom line is, before you can resolve these financial issues, you must -- and I stress must -- have a comprehensive list of all assets and debts, what they are worth, or what is owed on them.

For most of my mediation couples, this is not terribly difficult. If one spouse has greater knowledge of the family finances than the other, I help them organize the necessary information to level the playing field. Often this is done in conjunction with attorneys and financial experts.

Child and Spousal Support

There are two main components, each of which is critical.

 The first component is to know your and your spouse’s incomes. For W-2 employees, this is pretty straightforward. It gets more complicated when spouses are independent contractors, self-employed, or business owners, but again, with the help of financial or legal professionals, it can be accomplished transparently.

 The second component is your budget. What have you and your spouse spent historically to fund the lifestyle you and your children have maintained? I give my clients a budget for that helps them do this. Then another budget looks prospectively to what their new lifestyle will cost. These budgets take time but create a valuable tool to help the parties clarify what they will need to fund the lives they envision going forward after the divorce.

 As I said in Part One, and I cannot stress this strongly enough, once you have concrete figures for all of your assets and debts, for your useable monthly incomes and for your past and anticipated monthly budgetary needs, you will be in a position to negotiate a settlement that makes sense under the law and meets everyone’s needs going forward.

 And you will find that as you accumulate this knowledge, whether you bring it with you to the mediation table initially or acquire it through the process, much of the fear and anxiety about the future will dissipate. And for many people, as that happens, the anger dissipates as well.

Though it is never easy to create two lives where there was one, you can make this transition easier on yourself by learning and preparation. From there, your new life begins.

Once you have concrete figures for all of your assets and debts, for your useable monthly incomes and for your past and anticipated monthly budgetary needs, you will be in a position to negotiate a settlement that makes sense under the law, and meets everyone’s needs going forward.

You will also find that as you accumulate this knowledge, whether you bring it with you to the mediation table initially or acquire it through the process, much of the fear and anxiety about the future will dissipate. And for many people, as that happens, the anger dissipates as well.

In Preparing for Divorce: Part Three, I will discuss the many kinds of experts available to help you and your spouse value assets, answer tax and financial planning questions,determine incomes and when needed, to deal with the emotional aspects of divorce for you, your spouse and your children - stay tuned.