In the last article on the Equitable Mediation Services blog, we focused on how couples can use divorce mediation in NJ to put together an agreement that allows them to manage their parenting plans while they proceed with their divorce at their own pace as given financial pressures, they may wish to delay things for weeks, months or even years.    Today we’re going to focus on the equitable distribution of marital assets and liabilities and what issues couples can resolve while using a NJ divorce mediator to ease the transition of their financial lives during and after divorce.   As we said before, given the times we live in many of the couples we see at Equitable Mediation Services are under severe financial duress and not in a position to proceed right at this very moment but they still want to move things forward so they hire a NJ divorce mediator thinking it’s better to get this over with than to remain in limbo.  But what some couples are relieved to find out is that when they file is completely up to them.   Some people use this as an opportunity to make arrangements regarding their finances to they can get a handle on who will get what as part of the divorce settlement and their Memorandum of Understanding and they can plan their lives for the future.  Then, when they are ready to proceed, they file knowing full well which of the assets and liabilities each of them will have as part of their equitable distribution.

As you know, one of the most difficult things any married couple faces is the sharing of household finances.  Over the years you probably opened numerous joint bank accounts, credit cards, took a mortgage in both of your names, bought property and shared retirement assets through your 401(k) or pension.  All of these items take time to value and divide so coming to see a NJ divorce mediator prior to having the conversation and filing can be a big help in easing your financial transition.  Face it: you can’t have this talk on your own as like the old saying goes: what’s the number one thing couples fight about?  Money! In our time together we will create a balance sheet and budget for both of you as a married couple as well as for your future lives as single people and use that as a the basis for our discussion, dividing assets and liabilities fairly and equitably.  Remember: NJ is not a 50 /50 or community property state but rather an equitable distribution state which allows couples to divide their assets and liabilities as they determine is fair to each party.  We will also order valuations of major assets such as real estate or pensions and factor this in as well as getting these reports takes time and does have a major impact on what one’s bottom line will look like.  We can then put it all together to give each of you a complete financial picture of what you look like as a couple and what you will look like as individuals.

In our next article, we’ll discuss the moves you can make with regard to child support and spousal support / alimony and conversations you can have in order to begin the process of calculating the appropriate amounts of each and planing for your and your children’s financial future.

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If you have any questions about divorce mediation in NJ or how hiring a NJ divorce mediator can benefit you, please feel free to contact Equitable Mediation Services to schedule a free, no-obligation consultation in one of our nine North or Central New Jersey office locations.  Or feel free to visit the Equitable Mediation Services website where you’ll find lots of great information about parenting plans, equitable distribution, NJ child support and spousal support / alimony and contact us when you’re ready.

In today’s economy, many of the couples we see at Equitable Mediation Services come to us with a rather bleak financial picture and it’s no surprise given the news we hear every day.  With jobs hard to come by and the housing market still suffering losses, many divorcing couples are faced with the unenviable task of dividing liabilities rather than assets and are finding coming to an equitable distribution agreement to be more difficult than in years past.  Typically divorcing couples expect that once they “clear the decks” and sell the marital home, each of them will have a lump sum of cash to start over but sadly with today’s housing market, it’s usually not the case.  As a New Jersey divorce mediator the Memorandum of Understanding (MOU) I am drafting for client couples typically contains a balance sheet which lists all of the couples assets and liabilities and shows how each will be divided.  Think of it as a “divorce mediation worksheet” that outlines your overall financial picture as a married couple.  Working together, we discuss how each of the assets and liabilities will be divided and work to come to a fair and equitable agreement that each of you feels meets your needs and goals as you move forward into your new separate lives.  But what happens when all you have left is debt and neither of you wants to move forward or one of you feels you should get all the assets while the other is left with all the debt?

A simple rule of thumb when it comes to equitable distribution is with the asset, too goes the debt.  For example, let’s say a client couple owns a home jointly and has a mortgage on the property.  If during equitable distribution discussions, it was agreed by both parties that the wife was going to get the marital home as part of the settlement, then with the home would also go the responsibility of the mortgage.   On the balance sheet, we would then use the market value of the marital home and list that in the assets column and the take the outstanding balance of the mortgage and list that in the liabilities column.  The difference is what the wife received in equitable distribution.  As we previously discussed, sometimes the value of the home is “underwater” whereby it’s market value is less than what a couple owes on it.  In this case, the client couple would also need to discuss if the wife needs to be compensated with some other assets (or similarly trade off some other liability) in order for the couple to agree the equitable distribution is fair and equitable.  Remember: equitable distribution does not necessarily mean one party will receive a positive asset or cash it just means that each party has what they consider to be a fair and equitable distribution of both marital assets and liabilities, even if that means you are both in a negative equity position. Confused?  I could see why but don’t be.  As a New Jersey divorce mediator, it is my job to help you and your spouse sort through all of your assets and liabilities and draft an agreement that allows each of you to move on with your lives even if it means coming up with a creative solution that only mediation can provide.

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Joseph Dillon is a Professional Accredited Divorce Mediator in NJ and the owner of Equitable Mediation Services a New Jersey divorce mediation practice serving Northern and Central New Jersey, Somerset, Mercer, Middlesex, Essex, Morris, Monmouth and Hunterdon counties including the towns of Edison, Parsippany, East Brunswick, West Orange, Bridgewater, South Brunswick, Hillsborough, Livingston, Randolph, Maplewood, West Windsor, Summit, Plainsboro, Millburn, Morristown, Montgomery, Madison, Readington, Branchburg, Warren, Princeton, Metuchen, Lawrenceville, Pennington, Short Hills, Bernards, Bedminster, Colts Neck, Holmdel, Roseland, Montclair and surrounding areas.

If you gave 100 people a dollar and asked them to “divide it fairly” what do you think they would do?  Would one of them keep all of it or would they be more likely to split it 50/50, each taking half?  Couples using divorce mediation in New Jersey face a similar question when it comes to the concept of equitable distribution as when they use divorce mediation to settle their differences, how they choose to divide their assets and liabilities is up to them.  Similarly, NJ divorce mediation allows couples to determine what they feel is fair and equitable, even though each parties list of assets and liabilities may not add up evenly.  What if I told you one of the people I asked to divide the dollar was not from this country?  Do you think giving a citizen of say Germany $0.50 would do them any good?  Probably not.  You see with divorce mediation, it is up to the individuals to determine what is fair and equitable and with the help of an accredited New Jersey divorce mediator, they can come to an agreement that works for them.  What if one party wishes to purchase a new home and they need cash for a down payment?  They may be more willing to trade retirement savings and investment accounts for a checking or savings account that may be more liquid and allow them to put a down payment on a new living space.  Similarly, perhaps one party is close to retirement and instead of having to start all over at age 55 saving for their golden years, is willing to forgo their interest in the marital home in exchange for keeping their 401(k).  All of these decisions are yours to make but only if you use divorce mediation.

In mediation we use the concept of “bargaining from positions versus interests” in which we try to avoid having one party simply argue for something just because they are entrenched in that position and aren’t really sure why they want or need that particular item.  Instead with couples using our mediation services, we take the time to explore their options, determine what the parties mutual and well as individual interests and goals are and help them make decisions to achieve those goals.  Sometimes the road ahead is not so clear but with the help of a NJ divorce mediator, it can be.  So before you proceed with your divorce, ask yourself the following three questions:

1. What are my short term and long term goals after I am divorced?
2. What is it that I absolutely have to have in order to achieve them?
3. What is it that I am willing to offer to my soon to be ex-spouse in order to realize these goals?

Once you can answer these three things, you’ll be in a much better position to settle your divorce and make your own decision about equitable distribution and what is fair to you.

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Joseph Dillon is a Professional Accredited Divorce Mediator in NJ and the owner of Equitable Mediation Services a New Jersey divorce mediation practice serving Somerset, Mercer, Middlesex, Essex, Morris, Union and Hunterdon counties including the towns of Edison, Parsippany, East Brunswick, West Orange, Bridgewater, South Brunswick, Hillsborough, Livingston, Randolph, Maplewood, West Windsor, Summit, Plainsboro, Millburn, Morristown, Montgomery, Madison, Readington, Branchburg, Warren, Princeton, Metuchen, Lawrenceville, Pennington, Short Hills, Bernards, Bedminster and surrounding areas.