Many couples assume mediation is futile because they cannot agree over the division of marital assets or property. Not so. In mediation, mediators use various different techniques and tried and trusted methods to help couples reach agreement on the division of property and assets.
A fundamental part of the mediation process is the preparation of a financial summary. The financial summary is an overview of the couple’s finances at the time of preparation. It is a photograph of the finances of the marriage/relationship as they stand today. It is not a photograph of how the finances will be in the future.
Dealing with the division of assets in the mediation is viewed from the perspective of what our finances are like now and how are our finances will be in the future. Mediators encourage couples to look at the assets situation from a number of perspectives – How are we going to function as parents going forward?. How are we going to provide for ourselves? How are we going to provide for our children?
Section 1 Financial Summary
The financial summary is largely divided into five sections. Assets, income, debts and liabilities, weekly expenditure and pensions. All aspects of the marital/relationship finances can fit into one of these headings.
The mediators assist the parties in dividing up their documentation to meet with each of the five categories outlined above. In doing both their parties and the mediators are learning about the finances of the relationship. This will assist them at a later point during the mediation when they are planning their budgets and finances going forward.
Section 2 Budgeting
After the parties have completed their financial summary they will be in position to examine their present finances and look at different options as to how they might function financially when they are separate and apart. Many couples who entered the mediation process live in fear of this part of the exercise. The truth is from a mediator’s perspective this part of the exercise is relatively straightforward in the vast majority of cases. The reason being that he family’s finances will often dictate the solution under the circumstances. Financial parameters will often control what options are available to couples in the separation. Be it in the case of large asset separations or separations were the couples might not have a large amount of monies at their disposal.
Mediators will assist couples in preparing a detailed financial plan will set out how their finances will operate going forward and how the present acid-base will be divided. Sometimes couples will put provision aside out of their separation/divorce for their children. The remainder of the assets will sometimes be set aside for one other or both of them is the case may be. These options can be discussed with the mediators in the in joint sessions.
Questions to be asked:
How will we finance our living expenses?
How will we finance our groceries?
How will we finance our children’s education?
How will we finance our retirement?
These are some of the types of questions that are asked by couples in mediation. Where parties previously enjoyed one family home, separating can create financial difficulties where the parties are trying to secure two-family homes. Perhaps it will mean that the family home is to be sold and two properties rented? Or perhaps it will mean that one party will have to stay in the family home until such time as the children have reached the age of majority. Thereafter, will the property be sold and the proceeds divided? It is encouraging for couples to find that there is not one option but many options at this stage of the process. Invariably, couples will find a grey area that can provide potential solutions for both parties. Strengths and weaknesses tests along with best alternatives and worst alternatives are different techniques used by the mediators to help parties in reaching a conclusion.
Many couples negate to discuss the issue of pensions. In many cases, a pension over its lifetime will be worth more than the value of the family home. Accordingly, pensions are an important asset to be discussed in most mediation is. Like other assets, pensions can be divided under certain circumstances. Options such as the division of a pension or assigning a death-in-service benefit to a particular family member can be discussed by the parties in session.