Hi, everyone, and thank you so much for tuning in to The Divorce Field Guide. My name is Ani Mason and I am a divorce lawyer and mediator and also the creator of this podcast.
Today, we are in Episode 20, and we’re going to do a bit of a different format than we’ve done in previous episodes. We’re going to do a Q&A format, and I have 20 questions that I am going to run through from our audience and do my best to give short summary answers to.
So, just a couple of caveats, which I know you’re familiar with by now, having reached the twentieth episode of this podcast. In the limited time that I have in this episode, I definitely can’t go into great detail in response to every question that I have received. So, I want to put out there that, take everything that I’m saying with a grain of salt. If it applies to your situation or it seems to apply to your situation, just remember that I don’t know the particular facts of your situation, so I can’t give you any kind of tailored legal advice. However, I will do my best to share my thoughts on these questions as we go through them – and again, in a summary fashion – so some of the more nitty-gritty details of particular points, I’m going to skip over (because I also don’t want to bore you too much), but I’ll try to give you a gist of how I think about these questions that come to me.
Question 1: I have thought about divorce in the past. I’m not ready to go forward with it at this point. At what point do you think somebody should consult with a lawyer about their divorce?
Interesting question. I would say, as a lawyer, I may have somewhat of a biased perspective on this, but my instinct would be to err on the side of an earlier consultation than not.
I think that, what I find when people come to consult with me is that, sometimes there are elements of divorce law and realities of the divorce landscape that are surprises to them, that they had no idea were the case, or that would be a reality in their divorce.
In the least ideal cases, it can be something that maybe would have affected your decision-making, either about initiating your divorce process sooner or about a particular way you’ve arranged your finances, or made decisions about working or leaving the workplace, or whatever the decisions were.
So, probably my own suggestion would be for everyone who is married to have a single legal consult, to understand what the terms of this marital contract that they’re entering into actually are. Because there are financial terms that apply to you when you get married, and apply to your financial lives, that most people are not aware of. (Understandably. They would have no reason to be.)
That’s sort of the process that people go through when they negotiate a prenup because that almost always involves attorneys and attorney consultation. At the outset, the attorney you consult with when you’re going through a prenup process, or even a postnup, is explaining to you what happens – more from a financial perspective – what happens in the event of a divorce, so that you have that information, you’re informed, and then you can make – it’s not at all to encourage you to get divorced – but just so that you are acting and making decisions in an informed way throughout your marriage.
So, that’s a slight tweak on that question. I would say maybe even before you are considering getting divorced, it’s not the end of the world to understand what the terms of your marital contract are from the law’s perspective. And then, of course, if you are considering divorce, I would encourage you to go have a consultation.
Some people have a consultation with an attorney, and you never hear from them again, or you hear from them in five years, and that’s fine. Whatever your timeline is is completely fine. You don’t have to be ready to pull the trigger before you set foot in an attorney’s office. Although I know it can really – it can feel very daunting, and that’s a big decision to make, to reach out to a lawyer. So, I absolutely understand people’s reticence to do it, but I am of the opinion that more information, generally speaking, the more information the better.
So, I would encourage you to get that consult ASAP. And even if you’re not thinking of a divorce, although if you’re not thinking of divorce, you’re probably not listening right now. So, anyway, my two cents.
Question 2: What’s the best way to tell my spouse that I want a divorce?
I don’t know. I don’t know what the best way to tell your individual spouse is.
Some people, maybe most people, I would say, have that conversation in person. Sometimes it’s just between the individual spouses. Sometimes, if you’ve been working with a couples therapist, it’s with the, in the presence of or with the assistance of, that couples therapist.
If you feel apprehensive about your spouse’s reaction or just about your ability to respond to your spouse’s reaction or questions, you might feel more confident with somebody else in the room helping you with that conversation.
I would not have the conversation necessarily with anywhere in the presence of your children, not that I think that’s really anybody’s instinct.
Some people do it in writing, that’s less common.
And then, I would say a small percentage will consult with a divorce attorney or will reach out to a mediator even, and if that mediator is willing to have separate conversations with each spouse individually, which that depends on their practice – personally, I don’t do that but many mediators do – they might ask their lawyer or might ask the mediator to reach out to their spouse to let them know that they want to proceed with the divorce.
My instinct in the majority of cases is that a direct conversation or a conversation with the assistance of a therapist or a trusted – whether it’s like a minister or a pastor or a trusted friend/guide – is probably the best way to go, but it is totally dependent on you, your spouse and your relationship.
There’s another layer of complexity if you have any concern about safety in the wake of your spouse’s reaction to learning this news. That’s something that you absolutely want to consult with an attorney and flag that right from the get-go as an issue that you have concerns about. If there’s been any kind of high conflict or violence between you and your spouse in the past and that you’re apprehensive about talking to your spouse divorce.
So, it’s not for all couples, but just generally speaking, I think the best way is to probably tell your spouse directly rather than have an attorney or a mediator or another professional contact them on your behalf, but that may not be true in your case. It’s really case dependent, and I can’t say for each individual case what’s best.
Question 3: I don’t want to go to court for my divorce, but I don’t trust my spouse. Am I making a mistake trying to settle out of court?
This is a tough one. I guess the first distinction I would make is between not trusting your spouse in a relationship, not trusting them to be faithful to you, not trusting them because they have made commitments to you that they have not kept, not trusting them as a person, and not trusting them to comply with the legal requirements on them in a divorce process to transparently disclose and fully disclose their finances.
You do not need to trust your spouse as a person, as like a whole being, or trust them as somebody you would want to be in a relationship with, in order to be able to settle your case out of court. Absolutely not. For many spouses, there have been multiple instances in their relationship that have involved betrayals and disappointments and an experience by at least one spouse that the other spouse has absolutely not honored their word, their commitment.
But, that kind of lack of trust can be very different from a concern that a spouse would intentionally deceive you in a settlement process.
If you have the first concern, where you just think your spouse is not a trustworthy person, they don’t honor their word, or they were unfaithful, or whatever, insert whatever untrustworthy behavior, but you don’t think they would go so far as to be dishonest in terms of finances, I have less of a concern there. I think you can absolutely put in conjunction with, or in collaboration with, your attorney, your mediator, you can put procedural protections in place to ensure that your - to the degree possible - that your spouse is being honest, forthcoming, and that you’re operating with a full understanding of whatever your situation is, rather than having the wool pulled over your eyes.
On the other hand, if your spouse has historically exhibited behavior of financial untrustworthiness, and willingness to lie, e.g., to the IRS, or willingness to lie to business partners or investors, or deceitful and untrustworthy behavior more around legal or financial dealings, that raises a bigger red flag for me. That is a line that many people who, maybe they were unfaithful in the relationship, which is certainly an untrustworthy behavior, but they do not cross the line of lying in a legal or a financial or more official context.
So, if you are in that latter camp where, “Yes, yes, my spouse was sued by his or her business partners for lying and stealing money from their firm,” I would say you really need to consult with an individual attorney. I would not start out in mediation in that kind of fact pattern. Consult with an individual attorney, explain to them your concerns, and talk with them about, what are the protections that exist in court, which is the litigation process, and what of those can we carry over to an out-of-court settlement process, and what ones do we lose?
So, if you were in litigation, your attorney will likely take a deposition of your spouse. That’s probably not going to happen in an out-of-court settlement process, almost certainly not in a mediation or a collaborative case. That said, if you go to court, there are financial affidavits that both spouses have to fill out, sign and swear to the truthfulness and the completeness of, and that certainly can and should be part and parcel of your divorce, if you’re doing it as an out-of-court settlement. You can do some of the same document exchange that you would do in a litigated process in an out-of-court process.
So, I guess what I’m saying is, number one, having an untrustworthy spouse, or a spouse you don’t trust, is not uncommon in a divorce process. And it’s not at all the case that you need to trust your spouse completely to be able to have a successful settlement out of court.
That said, if you are concerned that your spouse is going to be lying, deceitful, not disclosing of information that’s fundamental to your case, financial information, I have a concern. I would definitely start with an attorney consult, and I would work with an attorney throughout that kind of case rather than, for instance, doing just a mediation where you don’t have your own advocate who’s helping you figure out how to put protections in place to ensure, as much as you possibly can, that you’re getting all the relevant information.
Question 4: What’s the best way to get my spouse to participate in mediation? He/she won’t respond to my emails or set up any meetings.
This is a tough one. If your spouse is not willing to participate in mediation, you cannot make them participate in mediation. It’s a voluntary process. Collaborative law is a voluntary process. Even settlement negotiation, which is what I refer to, or the term that I use, for litigators and traditional attorneys just negotiating a settlement between them, you can’t force somebody just to participate in that either.
The only thing that you could do without your spouse’s voluntary participation is initiate a litigation. And then, they basically have the option to participate, or to have the case go forward without them. For most people, that motivates them to participate.
What I would say in terms of what’s your best shot at getting your spouse who’s reticent to participate in mediation to participate, I would say keep it sort of short and sweet. As we talked about in Episode 19, don’t mount to crusade for mediation. Be straightforward, and as neutral as possible, and explain – maybe it’s something that’s better to do in writing. I don’t know. You know the best way that you communicate with your spouse, but – and explain why you think mediation makes sense for you, what your concerns about going to a litigated process are (be careful not to frame those as threats), and put out in a clear, neutral way, “Look, I really don’t want to go to court. I’d like us to be able to mediation. I think it would save us money. I think it would help us be better co-parents down the road.” Whatever your reasons are. “I understand if you’re not up for that. Here are the mediators that I’ve looked at. If you want to reach out to them, great. I will assume that you prefer me to file in court if we haven’t scheduled a mediation in the next month.” Or next six weeks, or whatever timeline makes sense to you.
So, no threats, I wouldn’t express, anger or annoyance or anything like that. Just very clear. “If I don’t hear from you, if we don’t have a session, I’ll just – I get it. You’re not interested, and I’ll move forward with a litigation. It’d be my preference not to, but I understand if you’re not up for mediation.”
So, just try to have the lightest possible touch. And if they’re interested, either because they proactively want to be in mediation or because they don’t want to be in litigation, then they will participate, and if they are not, then they won’t, which at the end of the day, you can’t control. So, you don’t want to waste too much time trying to drag somebody into mediation. But I think that that approach that I just described gives you your best shot.
Question 5: How is collaborative, if you have two attorneys, a divorce coach, a child specialist and a financial person, an affordable option?
Great question. Listen, collaborative is not a cheap option. Neither is litigation. Mediation tends to be a less expensive option. But, you know, I don’t know, every couple is different.
What I say to people about collaborative is that it is not that you have now five professionals working on the case, and you’re doing five times the work that you otherwise would have done if you just had one professional mediator. No. You’re doing a division of labor.
So, your attorneys stay very, very focused on the legal and the negotiation strategy component. And then, oftentimes, a divorce coach and a child specialist can be the same person. So, they’re not necessarily two people. And again, I know I’ve said this before, but you don’t have to have all these people in a collaborative case, and many cases work best with a full team.
The divorce coach, child specialist, they may be the same person, and you are working with them on your co-parenting and working together with each other effectively in this process, and you’re not working with your attorneys or your financial neutral on those things. So, it’s not duplicated efforts. It’s just that you’re getting more specialized and expert assistance for the different areas of your divorce, i.e., the legal negotiation area versus the parenting area.
And then, with the financial neutral, same deal. Your attorneys are not going through all the financial information that the financial neutral is. In fact, in some ways, I think it saves you time and money to have one neutral person going through the tax returns, go through the account statements, doing the business valuation, rather than having your attorneys logging those hours, both of them, and coming up, probably, with more biased and polarized perspectives on them.
So, is collaborative an affordable option for you? I don’t know. I don’t know. It tends to be a more expensive option, but it also tends to be a fit for more complex cases, which are not going to be inexpensive cases whatever way you slice them. So, those are my thoughts there.
Question 6: Can I hire an attorney who litigates to represent me in a collaborative divorce?
Yes and no. Let me see, a couple of thoughts. So, there are many attorneys who litigate, practice collaborative law and/or practice mediation. So, in theory, you could certainly hire someone who also litigates in their practice to be your collaborative lawyer, if they’re trained in collaborative law, and they practice collaborative law.
In a true collaborative case, they’re going to be signing a participation agreement that says that they will not litigate your case. So, that’s one option, and that’s certainly available to you.
I’m not sure here if the question is more, “Can I hire a litigator to help me try work it out in a collaborative case, but then if it doesn’t work out, that person could litigate for me?”
In a true collaborative case, no. Because part of the underpinning of a collaborative framework is that neither of the attorneys will later litigate the case if it doesn’t settle.
However, you don’t have to be a purist about collaborative law. Maybe what works best for you is to have a litigator who’s helping you in a – what I would more think of as a – settlement negotiation. Your spouse’s attorney is a trained collaborative attorney. You are doing more in-person meetings, which is more in keeping with the collaborative style, than you would in a traditional settlement negotiation, where you’re doing more of your negotiating, you know, back and forth through writing and phone calls between the attorneys. Maybe you also incorporate a neutral business appraiser to help you value your medical practice rather than, in a more traditional model, each hiring your own expert appraiser to value the business and coming to different places. Maybe you work with a neutral.
So, there are many different ways to structure your divorce process. You can absolutely work with a litigator who works with you to try to settle your case, whether it’s in a true “collaborative” process or not, and then who is available to you to take your case to court if need be, if things don’t work out.
Again, if they are going to later litigate your case, technically, it’s not a “collaborative” case, but it can still have many of the excellent qualities of a collaborative case, which might be the best fit for your situation.
Question 7: What if my mediation or collaborative divorce fails, and I end up in court? How does that work?
Well, that’s a complex question. I’m going to give you a really general overview.
The gist is that at the point at which you, alone, or together in consultation with your attorney, decide that your settlement process, your mediation process, your collaborative divorce, it’s just not working – you’re at loggerheads. You’re stuck. You’re entrenched. It’s not going anywhere – or perhaps someone is not participating. For whatever reason, it’s not working, and you’re going to make the decision to transition to a litigation process.
If you’re working with an attorney who does not litigate, at that point, you would be asking them to help you, to help connect you, with a colleague of theirs who litigates, if you don’t already know the litigator that you want to work with, which you may.
So, there’s typically coordination between your collaborative attorney and then your future litigator.
If you’ve been in a mediation, and you have not been working with consulting attorneys outside the mediation, your mediator is probably not going to be the person who’s coordinating your individual transition to a litigator. That’s a little bit more complex and less common than, for instance, if you have a consulting attorney who’s been helping you outside the mediation but, for whatever reason, litigation is not part of their practice, they can’t help you initiate a court case. Well, then, they would, just as a collaborative lawyer, they would be assisting you in transitioning to your new attorney, and then that attorney would really be your point person for what happens next.
So, that’s sort of an abbreviated answer to that question, but it’s complex and varies a lot person-to-person as to how that transition works from mediation or collaborative to litigation.
Question 8: Is it true that a 50/50 parenting schedule is now the assumption, and you have to have a good reason not to have the 50/50 schedule?
This probably varies a lot by jurisdiction.
Speaking for New York City, what I can say is that 50/50 parenting schedules have absolutely increased in frequency and are infinitely more common now than they were historically. So, they’ve become increasingly more common.
I don’t know that I would say that 50/50 is more common than a parenting schedule where one parent has, where the kids have one primary residential parent whom they’re with most of the time and then another parent whom they see alternating weekends. My own sense would be that 50/50 is maybe slightly more common; however, I think I have a sample set bias because people who are working with me work in mediation or collaborative law, and I think it’s probably more common in those processes to end up with a 50/50 schedule than it is if you go to court, but I’m actually not sure.
So, it’s a good question, but I don’t know the answer.
At least in New York, it is not the law that the assumption or the presumption, the starting place is 50/50. I’m not talking about black letter law at all in my response. I’m just talking about what the practice is and what I see people negotiate as resolutions.
So, yeah, I’m not sure, good question.
Question 9: Should our kids have a say in our parenting agreement? Would they have a say in court?
Across the board, in general, what you don’t want to do is say to your kids, “You can pick your schedule with us.” Because you don’t want to put that on them. It’s too much pressure. It feels like picking between the parents.
Consult with any child specialist, parenting coordinator and get their guidance specific to your family – I don’t know your family – but generally speaking, you don’t want to just full-on hand over the decision-making to your kid. That’s kind of more freedom, it’s almost more responsibility than they need, rather than freedom.
However, with older kids, so 16, 17, the reality is that, for some kids, if they don’t want to do the schedule, it may be hard to get them to follow a schedule that doesn’t work for them. So, practically speaking that can absolutely be an issue where you’re negotiating your parenting schedule, and it’s like, there’s no way our son or our daughter is going to do this.
If you are experiencing that, I definitely encourage you to work with some kind of co-parenting, parenting coordinator, child specialist, somebody who is focused on working with families going through divorce and can help guide you through how to navigate that with your kid in a way that is respectful of your kid and their needs, but also maintains your joint authority as the parents, who are making the ultimate decisions.
And then, would a kid have a say in court? Look, in a full-blown custody trial, it depends. Generally speaking, an attorney would be appointed for the child and sometimes for the children, sometimes multiple attorneys for each child, less commonly so, at least in New York, and they will try to express the child’s viewpoint, but that is not the deciding factor in what a judge would ultimately rule would be the parenting arrangement. That said, I would say the older a kid, the more influence their opinion might have in what a judge ultimately orders. But again, it’s not decisive.
Question 10: Do most people split holidays or alternate them? What do you find works best?
It varies. It really varies. It completely depends on your family. I don’t know.
I guess I would say maybe more people alternate them because I think sometimes splitting a holiday can really feel limiting to parents who want to travel to see family over that holiday. So, I guess it depends on the holiday we’re talking about, but for more significant holidays, if people want to travel, splitting the holiday, it can feel like it’s tying them to where they are for too much of the time, leaving them too little time to travel.
But for other families who anticipate being at home over the holidays, splitting the holiday works great. So, it totally depends on your family.
Question 11: If you have a co-parenting plan to make parenting decisions together and you can’t agree on a decision, what happens?
Good question. This is a challenge.
The practice may differ in different jurisdictions, but I would say, in my practice, it’s common for us in the agreement to address what would happen if you’re making joint decisions and you can’t agree.
So, some people will choose to not say anything about that and just deal with it at the time. And the reality is that if you are really stuck, and you can’t agree, well, you always have the option to go to court. Although, for many people who are working with me, at least, they have chosen not to be a court-based process, and so they really want to avoid court at all costs.
So, many of them will choose to insert some kind of parameters or structure for like, “What would we do?” So, what does that look like? It can take the form of saying, “Well, we’ll meet with a neutral professional. Maybe it’s a mediator. Maybe it’s the child’s therapist. For at least one session. Three two-hour sessions.” Whatever you want to say. “And work in good faith to resolve our differences.” But again, there is no obligation on you to agree.
Some people will go so far as to try to – well, two things: (1) to make a binding decision through their agreement. I have seen people say, “We’ll meet with somebody mutual. We’ll mutually agree on that person, somebody with relevant subject matter expertise. And if we have differing opinions, and that neutral person thinks that one of the things that one of the parents is saying is really in the best interest of the kid, that’s the thing that we will do.” And you commit yourself to honor one of the parents’ opinions in consultation with this expert.
The other thing I see people do, which is more reliably enforceable if you ended up in court, is to say, “We'll consult with each other. We’ll try. We’ll do our best to agree. We’ll even try mediation. (If you want to insert that in there.) However, if we can’t agree either one parent will have the final say on all major decision making,” or, more frequently, I see, “one parent is going to make the final decision on educational decisions, the other parent is going to make the final decision on health-related decisions.” And, it depends on what categories of decision-making you have in your agreement, but maybe one parent makes joint religious decisions that we can’t agree on.
Those are a couple of common ways that I see people deal with the fact that you may well disagree on how to handle decisions in the future.
I’ve also seen parents alternate years of having the “final say”. So, mom makes the final decision on education, and dad makes the final decision on health in even years, and it’s reversed in odd years, so that neither parent feels like completely boxed out of a particular category of decision making for their kid.
Question 12: I currently work part-time. Will I be required to work full-time if I get divorced?
That depends. If you don’t have kids, and you don’t have any need for income from your spouse, I can't say for sure in your case, but I think probably not. If child support or spousal support/spousal maintenance is part of your case, then very possibly.
This gets very specific to jurisdiction, so you need to talk to your own attorney or your mediator about this, but the reason why I say very possibly is because generally, the courts want to see that somebody is reasonably earning what they’re capable of earning when they are figuring out what amount of child support and spousal maintenance, if any, is appropriate.
So, if somebody is working part-time, 50% time, two-and-a-half days a week, it’s a good indication that they may well be able to earn more if they work full-time. That’s not true for everybody. Some people, because of childcare or because of whatever, are not able to work more than whatever percentage they’re already working as a part-time employee. But I do think that if the different supports – so, child support or spousal support is part of your case – and you’re working part-time, I think it’s reasonable to envision that you might have to work full-time.
At what point you start working full-time is definitely a question to figure out with your attorney.
Question 13: For couples without kids, how long would you guesstimate the entire divorce process would take from start to finish?
I am going to direct you to Episode 9, where I talk about the timeline for divorce because, as I said in that episode, I don’t know how long it will take a particular couple to resolve their divorce, kids or no kids.
Generally speaking, without kids, it takes less time. But it depends on the couple.
So, give Episode 9 a listen and see if that gives you some good parameters to answer your question. It won’t have an exact answer for your case, but it will give you at least some guidance that I hope is helpful.
Question 14: How can you divide IRAs and 401ks in a divorce if you’re under 59 and a half?
I think that you’re asking this because 59 and a half is the age after which you can withdraw from those special retirement accounts, tax-privileged retirement accounts, without penalty.
Maybe what’s anticipated here is, “If I withdrew from my IRA or my 401k to give half of it to my spouse, and I’m 45, aren’t I going to get a penalty?”
No, not necessarily. In fact, I don’t think you should. There’s a specific way that we can transfer retirement accounts pursuant to a divorce. You want to talk to your attorney or your mediator about that, but if done properly, you should be able to transfer retirement accounts without a penalty.
Question 15: If you own a home, is it better to sell it or to try to find a way to keep it?
I don’t know. It really depends completely on your individual situation.
So, I would recommend, certainly, that you talk about that decision with your attorney, if you’re working with one, but almost more importantly, that you talk about that decision with a financial advisor. Somebody who can look at the global picture of your finances and say, “This makes sense. This doesn’t make sense for you.” For whatever reasons.
There are so many different considerations. What are the carrying costs of the home? Will you be able to afford them? What other options do you have for the cost of renting an apartment? How much equity is tied up in the home? Would that be all of your assets? So, totally not diversified, all of your assets would be in real estate, in this particular location? Or, would it be a small part of your assets, which are still diversified in other asset classes? And many more questions.
So, that is a question really for your financial planner, I would say. Not even - I mean, you want to be in discussion with your attorney, if you’re working with one, about that issue, but they’re not even the best person to make that decision for you. It’s really a financial planning decision. So, with your investment advisor, financial planner, I would raise that.
Question 16: If one spouse wants to buy the other spouse out of the home, how does it work if they don’t have enough money to do so?
Right. So, in this case, just to clarify, the two spouses co-own a home, and one spouse wants to stay, the other spouse wants to move out, or is willing to move out. And the spouse who wants to stay not only wants to remain living there, but they also want to be the owner of the home.
So, in that kind of scenario, we talk about a buyout of the departing spouse’s interest in the home. And the question is, let’s say that that buyout amount is $500,000, to just pick a number out of thin air, but the spouse who’s remaining in the home does not have $500,000. The question is, what do we do in that case?
A couple of things. I mean, listen, sometimes a buyout is not possible for that reason because there is too much equity in the home, not enough other assets to allow the spouse remaining in the home to buy out the other spouse, and it doesn’t work.
But a couple of options there would be, if there truly were not enough money, you could agree to continue to co-own the home with one spouse, the remaining spouse, staying in it, living in it, and then agree on a time in the future when you will sell that home and split the proceeds in some way. And then of course, there are many details to be negotiated about, like who gets what credit for paying down the mortgage, and how is the growth in the market value, if there is growth in the market value, or a decrease, how is that shared by the spouses?
What this doesn’t address is, if the departing spouse wants to get their equity out of the home in order to be able to buy a new place, that doesn’t solve that problem for them, but it can be a solution especially where the goal of staying in the house is not so much to own it but to enable children to live in it for a certain period of time. So, that’s one option.
Another option is paying out the departing spouse over time. It doesn’t have to be one lump sum payment to buy the spouse out of the home. It could be multiple payments over years. You want to talk with your attorney, and your CPA, and your financial advisor about what’s possible, what makes sense, what’s permissible from a tax standpoint. Generally speaking, you want to make the distribution of marital property within six years of the divorce, but that is a generalization. You want to talk to your CPA specifically about your situation.
But anyway, it’s possible to buy your spouse out over time. So, maybe with your income, you would have enough money if you could complete the buyout in five annual payments rather than one upfront payment.
If you are agreeing to do a buyout over time, one other thing that can come up is an interest rate on, is that spouse who’s not getting, let’s say, it’s $500,000, they’re not getting their $500,000 on day one. They are waiting over a period of, in the example I used, five years, to receive their money. How are they compensated for that? Is there some kind of compounded interest or something like that that compensates them for waiting to be paid out over time? Sometimes there is, and sometimes there isn’t. And that’s based on your unique situation and all the other factors in your agreement.
But, that is a great question. The bottom line is that there are options. So, you can co-own for a period of time and sell later. You can buy out over time. But, if there’s not enough money, then the buyout option for your home may not work in your case.
Question 17: How detailed do we need to be in listing our belongings in the home? Do we have to inventory everything for our divorce?
The short answer is no. You do not.
I would focus on items of value. Some people don’t list a single thing. But, if you have very valuable jewelry, or artwork, or other items of personal property, your things, that are valuable to you, and/or that have been maybe a source of conflict in the past, or there’s been disagreement around, then, those individual things, I think, it’s a good practice to itemize and just say very clearly, you can include them as schedules in your agreement, “Spouse A is going to keep this list of things. Spouse B is going to keep that list of things. And everything else they’ve already divided between them, and people, each person, is keeping what’s in their own possession at this time.”
But, again, in some agreements there is no attention paid to that really, beyond to just say, “Spouse A is keeping everything in his or her possession and Spouse B is keeping everything in his or her possession. They’ve divided the personal property of their marriage and nothing more to say about that.” If that makes sense in your situation, that’s completely fine.
Question 18: If both spouses are on the same insurance plan, what happens on divorce? Can I take my spouse off my health insurance at any point?
Okay, so we’re talking health insurance, not life insurance. Good clarification.
I would tread really, really carefully if your spouse in on your health insurance. Consult with an attorney, but my sense in general is you do not want to take a spouse, make the unilateral decision to take your spouse, off of your health insurance.
If it’s a decision that two of you are making together because your spouse is accepting a job that provides insurance, and it’s open enrolment, and they wanted to do their insurance rather than yours, great. If you’re making that decision mutually.
Not a decision you want to make unilaterally. It can really mess things up, first of all, for your spouse in terms of qualifying for COBRA, and how long they have a COBRA runway for, but also, in particular if you end up in court, you do not want to be the spouse who unilaterally kicked the other person off of health insurance. That’s just not a great posture to – you don’t make a great first impression if that is what you did, without permission or against your spouse’s wishes.
So, please if you’re thinking about taking someone else’s health insurance, or changing insurance in any way, you want to consult with an attorney about that. That’s critical. So it’s a good question to ask.
Question 19: Filing jointly saves us a lot of money on taxes. Can you obligate your spouse to file jointly in a divorce?
Pretty much yes. So, the gist is that people can absolutely commit in their settlement agreement to file jointly. As with many things in the settlement agreement, does that obligate your spouse’s hand to sign their signature on your marriage filing jointly tax return? Not necessarily. However, what will often be built in is some kind of consequence – financial consequence – if that term is not complied with.
So, if you commit in your agreement, which you can do, “Yes, we’re going to file marriage filing jointly for this particular calendar year. We’re agreed on that. We’re putting it the agreement.” Then, you could additionally say, “If either of us does not obey by this, does not comply with this clause or this term of our agreement, and as a result, we file married filing separately” (or maybe they go off and file ahead of household and claim the kids, and you’re stuck filing marriage filing separately, which is not ideal), that the difference in taxes owed on your income, they would owe you that. Or you could think of another solution to it, but that’s one.
And maybe they pay for your attorney cost to deal with it. Generally, when somebody violates a term in the agreement, oftentimes the agreement will say, “If you are in default of the agreement (i.e., you do something you weren’t supposed to do, or you don’t do something you were supposed to do under the agreement), and the other spouse has to pay for an attorney to take you to court to get you to comply, sometimes a term in your agreement will be that the defaulting party, the person who is not obeying by the agreement, will have to pay the attorney’s fees of the other spouse. So, that’s another thing to think about.
Question 20: My spouse owns a business. If I get half of it in our divorce, how does it work for exes to run a business together?
That’s a great question. Hmm, I don’t know. It depends on your relationship. Potentially, not very well. But, a couple things I want to break down.
I don’t know that the jurisdiction of the person who’s asking this question, but I just want to flag “if I get half of the business in our divorce,” I don’t know that somebody would necessarily get half of a business in a divorce.
But let’s just assume that were the case, i.e., that the decision or the agreement in your divorce were that you’re getting half of the business, most typically, that doesn’t mean actually 50% ownership of the business. What it means is that you get the equivalent value transferred to you, similar to one spouse remaining in the house, and the other spouse leaving, we wouldn’t obligate you, the two of you, to continue living together in the house. Similarly, it’s really pretty atypical to obligate spouses to be co-owners of a business and run the business together, which could be a recipe for disaster.
Instead, the titled owner of the business, the spouse who owns the business, is generally buying the other spouse out of the business, as you’ve either agreed that it’s valued, or as it’s been appraised in your divorce process.
And that could look like a transfer of money, or it could be that, for instance, you keep all the retirement, and that’s roughly of equivalent value, and your spouse keeps the business. Or you keep the house, and your spouse keeps the business.
So, that can take a lot of forms, but generally speaking, exes are not running business together. There are definitely exceptions, but because – well, for obvious reasons, I think – for a lot of people that would be very challenging, and understandably so.
So, that is it for episode 20, our Q&A episode. I hope that it at least some of these questions were relevant for you and were helpful for you. And if not, feel free to send your questions in and if I get a critical mass of questions again, I would be happy to do another Q&A episode.
Before I sign off, I just want to thank you so much for joining me and for listening in to The Divorce Field Guide. It has really been a pleasure for me to record these episodes. I know that the subject matter of this podcast is not easy subject matter, going through a divorce is not easy, and it is really my hope that this podcast and these episodes can help you have the easiest possible and the most productive possible divorce.
So, thank you so much again for tuning in, and I will look forward to speaking with you soon.