Negotiations for the Right Reasons in Divorce

Sometimes divorcing people seek to covenant certain assets for the wrong reasons, typically fueled by anger.  "She cheated on me so I want her favourite......"(fill in the blank) is common.  When looking at the financial aspects of divorce, however, emotions should be negated in favour of logic.  Easy to say and hard to do, I realize.  I know my example is stereo-typical but all too often this is the scenario.  Wife wants to keep the house.  Why?  One reason is the way that women perceive money.  Studies have shown that women equate money with security.  A house has bricks and mortar and it provides shelter, after all.  Another reason may be that she does not want the children to experience too much change, all at once.  Dad is no longer at home and changing schools and the pressure of creating new friendships may prevail.  Although this reasoning may have a lot of validity, is it reasonable.  Maybe the house means a lot to him and she is angry but can she afford to keep the house?  Will she deplete all her assets held outside of the home to try to keep the house, finding out a few years later that she is house rich and in debt?

Maybe more logical choices are available keeping in mind the reasons stated for wanting to keep the house.  Perhaps less costly housing alternatives are available in the same neighbourhood so that that kids can go to the same school and have the same friends.  Maybe the newer housing alternative may be a benefit from other points of view like, no memories of married life and less upkeep.  Perhaps less expensive housing alternatives can also give her the opportunity to save for retirement, as well.

 In my example, I talked about the wife wanting to keep the house but men have other challenges in their financial decisions, especially if they are paying child and/or spousal support.  A little less often but becoming more common place that in past years is the issue of the wife paying support to her husband, especially since women have been advancing in their business careers and the same types of issues need to be considered in this scenario.  

The power of the financial neutral in a divorce situation is to draw out these conclusions before the financial errors are set in motion.  Often clients do not want to pay an additional professional (other than their lawyer) to help with the divorcing process but my argument is, "How can you afford not to?"

How to Divorce?????

Most people panic when they first divorce and their knee-jerk reaction is to hire a lawyer.  If you have never been through the divorce experience then talking to friends and searching the Internet become places for advice on where to turn.  Unfortunately, hiring your best friend's lawyer who you have heard is good because they are a real fighter may not be your best option.

In a time of overwhelming emotion it is sometimes hard to make a rational decision.  Racked with hurt, guilt or both can sometimes cloud judgement and enforce actions that you will later regret.  I think it is important to understand your choices so that you own your own process rather than meeting a lawyer who, for example, is litigious and finding that you are paying a lot of money for even more grief...grief that you could have avoided.  This may be especially important if you have to continue to co-parent in your post-divorce life.

Some clients prefer the 'per se' method, sometimes referred to as the 'kitchen table' method.  I encourage clients to do this if their conversations are open and honest and they can work together in an agreeable manner.  If they can figure out how to divide things up and they find it agreeable, that's great!  However, I always ask them to get Independent Legal Advice (ILA).  Remember those emotions that cloud one's thinking?  Giving away the house (literally) because you feel that you were responsible for your spouses hurt feelings will turn to regret once you start to work on your own.  ILA ensures that you are covered from a legal perspective and that you are not cheating yourself to what you are rightly due.  It also ensures that you are both signing a contract that you understand and that a professional has helped you to think about other alternatives.  I have had clients divorce using this approach and it works, in some circumstances.

Hiring that 'fighting' lawyer may be a good choice for someone who needs to be represented by a third person because there is an imbalance in the relationship or a huge sense of mistrust.  A litigious lawyer will under turn every possible scenario and fight with vigour....for many hours to represent their client's rights.  Although I am not sure that other alternatives would not work for couples who fit in this category.

Mediation is also a consideration.  Mediation is when a couple will sit with a mediator and place all the issues to be resolved on the table (custody, access and financial issues) and they will try to get the couple to do a little give and take to settle their separation agreement.  The clients come to their own resolve. Mediators can be lawyers but if they are they cannot give legal advice during mediation.  There are also many good mediators who are not lawyers.  My advice for clients who chose this method is to seek ILA once all the issues appear to be settled.

Arbitration is is similar in that the couple discuss their issues with a professional but the arbitrator will decide how to settle the issues.  My opinion is that this is dangerous as the clients do not take ownership in the decision making.  There is also a med/arb solution whereby the couple attempt to settle their difference and whatever they cannot settle is arbitrated for them.

Collaborative divorce is fairly new as it came to Toronto in about the year 2000.  Collaborative lawyers are trained to approach divorce differently than their litigious predecessors.  In a collaborative divorce each person hires a collaborative lawyer and all four meet to discuss the issues.  What is important to note is that all participants must sign a collaborative agreement stating that they will be respectful, honest and forthright.  Sounds civilized, right?  I think this is a great alternative if you are co-parenting after the divorce.  Litigation tends to be more of a shame/blame procedure, in my experience.  Collaboration does not promote hostility which is carried over in your life after the ink on the separation agreement is dry.  What's more is that the collaborative divorce process embraces the interdisciplinary.  Collaboratively trained professionals, other than your family law lawyer, can be involved in your process depending on your needs.  Family professionals can help develop an access plan commonly referred to as a parenting plan.  Financial professionals can help to forecast your financial future with your portion of the assets that are split.  Can you still afford to retire?  Can you afford to keep the house? 

I think it's important to understand that you have choices.  In hiring your best friend's lawyer you may get 'sucked' into a process that isn't really suitable for you.  I would urge you to 'interview' a few lawyers before you make a decision.  If you are looking for a recommendation for a someone to help you with your dispute resolution let me know and I can give you a few referrals.