Defining a Divorce Mediation Agreement
Divorce Mediation Agreements are written contracts that reflect the outcome of divorce mediation. Mediation – a collaborative matter within the realm of Alternative Dispute Resolution (ADR) – is a process through which divorcing couples work together to reach an amicable agreement rather than let a judge decide their future.
Typically, mediation will be a much more cost-effective, less adversarial and overall healthier approach to dissolving a marriage than a litigated divorce, where decisions on matters such as child custody, equitable distribution of property and debts, and a wide range of other divorce-related topics are made by the courts .
Through mediation, these decisions are instead up to the divorcing spouses, to be negotiated and incorporated into a signed contract that reflects the fair and reasonable terms that they both agree upon. That contract is known as a divorce mediation agreement.
Every divorce mediation agreement is unique and tailored to the couple’s specific circumstances. To be sure that a divorce mediation agreement meets all requirements, both in terms of process and content, it is wise to consult with a qualified mediator or attorney who is experienced in Alternative Dispute Resolution and divorce law.
Advantages of Mediation During a Divorce Process
When it comes to high-asset and high-net-worth divorces, mediation often makes a lot of sense for a variety of reasons. High on the list is the fact that divorce mediation costs a fraction of what going through the divorce process would cost. Even more to the point of saving money is the undeniable fact that when you find a peaceful way to settle your differences with a spouse, you will be spending far less money than if assessors and judges are forced into the role of divvying up the spoils. The fact is that divorce mediation saves money, as well as time.
More, mediation allows you to deal with the process and the outcome in a private manner. Public court filings are off the table and confidentiality is the name of the game. This is important for both personal and business reasons. Finally, you may not only be resolving your issues in a more cost-saving and private manner, but you may just come out of this experience with a healthy relationship with your spouse. For sake of your children, this last point is most important.
Process of Creating a Mediation Agreement
The initial step in creating a divorce mediation agreement is the one that, for many clients, can be the most difficult one of all. It involves calling a lawyer to get the process started. Next, the couple meets with their lawyer either together, or if they are able, they meet with a neutral third-party lawyer. This is called collaborative law mediation. If the couple meets together with a lawyer, the lawyer will listen to both sides and then prepare a draft of the agreement.
If the couple meets with a third-party lawyer, the lawyer first collects information about the family’s assets and liabilities. Next he/she determines how the property would be divided if the couple were to divorce that day and then prepares a draft of the agreement. Divorce mediation is collaborative in spirit, and should always be cordial, but this process keeps the couple from feeling confrontational and it has been proven that it works most of the time.
The next step in the process is to go over the draft and make any changes deemed necessary. If it is necessary or desired, a financial expert may be employed to provide assistance to a couple or a single party to determine the fair and equitable division of property. Once terms are agreed upon, the agreement is finalized and both parties execute the agreement either at the office of the lawyer or during a meeting with the mediator. After the agreement is signed, it is usually sent to the court for approval and submission to the judge to be signed.
If you have issues that you believe can be worked out in a mediation setting, do not hesitate to call my office.
Essential Components of a Mediation Agreement
The mediation agreement is the fruit of all the work you and the mediator have done in trying to reach a settlement. It is also the document that will be needed when finalizing your divorce or obtaining court approval of your settlement. Because of this, it must be as complete and as thorough as possible. Remember – the more complete the mediation agreement, the less likely there will be disputes when it comes time to prepare your papers for court.
There are many essential issues that the mediation agreement should cover. These include:
- division of all assets
- division of all debts
- custody
- visitation
- child support
- health insurance coverage
- education expenses
- spousal support (if any)
The major intention of the mediation agreement is to clearly detail how the parties have divided their assets and debts. In order to clarify this, each asset should be listed individually and all terms of transfer clearly set out. For example, if a marital residence is being awarded to a specific spouse, the agreement should contain all relevant information such as addresses, lot numbers, property identification numbers, and any other information necessary to accurately identify the residence. Further, the agreement should state exactly how the parties intend to verify that the residence has been transferred – i.e. whether or not the deed is immediately transferred and how title can be changed at a later date, or whether the deed will be signed by one party and held by the other until some pre-determined future event occurs.
Common Issues and Solutions
While divorce mediation provides a favorable alternative to traditional litigation in the divorce process, challenges are sure to arise along the way. It is crucial to understand these potential tribulations and how to effectively address them.
The most common issue in divorce mediation is disagreement between parties. During mediation, both spouses exchange offers with the hope of reaching an agreement of all financial and parenting issues. It is likely that one spouse will not be satisfied with the initial proposal provided by the other. Therefore, it is highly likely that negotiations will take some time and effort before the parties can reach an agreement. The negotiating spouses can become frustrated when they feel as though their interests are not being sufficiently addressed. In these situations, it may be prudent to take a step back and review the proposed settlement terms, evaluating specific areas of contention. While the goal is to become equally satisfied with the settlement, it is more likely that an agreement will need to be reached wherein each spouse sacrifices something. By reviewing the terms and determining which provisions are of the utmost importance , the parties are able to identify areas in which reasonable compromises can be made. Open-mindedness and thorough acceptance of individual viewpoints is an effective way to work through personal disagreements that arise during the mediation process.
Another challenge is improper mediation preparation. Effective mediation preparedness includes compiling financial documentation (such as income and asset proof), creating a list of specific goals and evaluating personal priorities, and seeking the counsel of experienced legal advisors. Mediation requires an in-depth understanding of the internal workings of the process, especially when finances and children are involved. When a party is unprepared for the process, emotional discord becomes heightened due to the sudden realization of how complicated the process truly is. Parties should obtain proper legal advice to determine whether informal mediation would be a proper fit, or whether the issues at hand would require the intervention of the court system. If mediation is the best option for the goal of divorce, parties should be as prepared as possible by evaluating needs, creating goals, and staying realistic when proposing terms of settlement.
Legal Aspects and Signing Off
The next topic to be addressed is the mandatory provisions in any divorce mediation agreement or Consent Decree. Such document must contain a parenting plan, provisions for child support, provisions for the distribution of a marital home or other real property and provisions for the division of any retirement benefits. The parenting plan is generally agreed to by both people in the divorce. Although not its own separate agreement, the plan should detail the schedule for the children to be with either parent. This may or may not be a 50-50 portioning of parenting time. It depends on the needs of the family and the distance of the parents’ residence from each other. The plan may also provide for the children to be able to speak with one parent if the child is not living with that parent. In addition to the parenting plan components, as detailed above, the Court requires a support provision. This is fairly standard. Usually, it will be based upon normal guidelines. The next issue is the distribution of real estate, which is also standard, if the marital home or other property is owned. The spouses can transfer their own interests of the property, provided that there is a mortgage payoff that must be made at closing. In most circumstances, the divorce decree will indicate that the spouse that resides in the home will be responsible for all costs associated with the property until the property is sold. There is a time limitation, usually 12-18 months, within which the property must be sold. At the time of sale, the mortgage and any back utility payments are paid and the rest of the proceeds from the sale are divided in accordance with each parties’ equity position in the house. The distribution of retirement benefits must also be part of any divorce agreement. While pension plans require the use of a document called a "QDRO" (Qualifying Domestic Relations Order) to officially divide up particular plans, many retirement plans do not require that mechanism. In such cases, a simple paragraph indicating the percentage of the plan to be distributed to one spouse from the other spouse as their marital asset, along with a reference to the accompanying QDRO, suffices in any divorce agreement. The last step in the divorce mediation process is the signing of the agreement. Once all elements are typed out and written into a formal document, the parties to the agreement must sign it in the presence of the attorney. The parties sign with an acknowledgement that they would like to have the agreement reviewed by the Court. It is understood by all parties that upon such a request, the Court shall take a de novo review of the parties’ agreement. In other words, the court judge will review the agreement section by section, just like a fresh lawyer looking at the agreement for the first time. Issues will arise if any of the terms are negotiated in bad faith or if the provisions appear to be inequitable. Anything that looks reasonable will be approved. The other means of enforcement is to attach the formal divorce agreement as an exhibit to the divorce complaint. Since the complaint is served on the other party, it would have the necessary notice of the document and, therefore, is binding on the parties immediately. This is not the preferred means of finalizing a divorce mediation agreement because it may not lead to the parties’ being able to settle the divorce themselves. It may become necessary to conduct formal litigation to obtain a resolution of the case.
Choosing a Mediator
Finding a mediator with substantial experience is crucial to making the divorce mediation process efficient, productive, and successful. If you find a mediator who doesn’t practice law, who lacks family or divorce experience, or who is unfamiliar with divorce litigation, he or she may not be able to advise you on issues that arise in the decision-making process. Even though a divorce may not be litigated, there are many issues that arise during the process that require an understanding of the law that a non-attorney simply doesn’t have.
The first step in finding a qualified divorce mediator is asking your divorce attorney, the person who is helping you navigate the process, to recommend someone. Our seasoned North Jersey attorneys refer mediators on a daily basis who are well-respected, well-vetted, and who we have had years of positive experiences with.
You can also explore the websites of mediators in your area or look at the directory of mediators on the New Jersey Divorce Mediators Association website, which has a member directory of mediators in the state, most of whom are also attorneys.
Cases That Made It Work
Many divorcing couples are not aware that mediation is what is known as a "process," rather than an actual contract that you sign. As a process, the terms and conditions that will be reached need to be memorialized in order for there to be some enforceability, but they can be done even after the divorce litigation has begun. Here are some common ways in which parties have used mediation to their significant mutual benefit:
The Children
Theresa and Matthew are the parents of two children, ages 7 and 9. After several unsuccessful attempts at court-ordered parenting time conferences, their case was referred to a mediator who counseled the parties that the best interests and welfare of the children were not being served when they could not agree upon the schedule terms and conditions for visitation. After three mediation conferences, Theresa and Matthew reached a compromise which allowed each the same number of weekend overnights, with the alternating of holidays and school vacations and agreeing to move of a rotating schedule at the children’s discretion once they reached the age of 7. The mediator prepared a written Child Parenting Agreement based upon the above terms and it was incorporated into the Divorce Judgment. The children’s welfare was served, Matthew no longer had to relive the all too frequent court conferences that resulted in nothing but anxiety, discomfort and inter-party tension, and the parents were able to enjoy the benefits of having a set in stone agreement.
Property Distribution
Joan and Barry had been married for only two years. Each was employed in good union jobs. Barry earned in the range of $90,000 and Joan beneath $40,000. Both agreed that Barry would receive the marital residence as part of the property distribution. The question was whether Barry should be required to buy out Joan’s half interest at the fair market value or Joan would be required to accept the buyout even though the value may be measured as of the valuation date of the mediation as opposed to the date of the agreement. Joan conceded that the fair market value was probably $225,000 and if there were a windfall down the road, it would be fair to split 50/50 but she wanted her right to share in the windfall now . Barry’s interest in stock options was more problematic. After four sessions, the parties agreed that Joan would get the marital residence out right and allow Barry to stay on for one year with full pay-out within 10 months, but within that time period, the parties would attempt to sell the former marital residence at the best possible price and if a sale occurred, Barry would pay Joan 50% of the proceeds with the buyer being aware that Barry would have a right of first refusal to stay at the property within 30 days after the sale.
Spousal Maintenance
In 2010, Illinois passed new spousal support legislation which has stirred much debate over the extent of spousal support as well as how the formula to compute the award should be applied. Eric and Karen had been married 20 years and each party had a history of employment in similar jobs. Karen recently was laid off from her position as a writer and expected to get back to work in a similar position, but was concerned that she might earn less due to the unstable economy. Eric felt otherwise and believed that as a result of the law, not only would Karen get back to work, but also he thought she would not be entitled at all to a maintenance award. After three sessions, Eric and Karen were able to agree that given the current job market, Karen would not be able to find employment with an average salary of $50,000 as she had in the past. Eric believed that if Karen resumed employment in the $50,000 range, he would be happy and he would be willing to pay her maintenance for five years to make up the difference. The parties agreed to "roll the dice": if she got back to work at a median income of $50,000, then they would split the difference. If she did significantly better than $50,000, the award would cut off; however, if she could not return to the workforce with some success, at Eric’s option, he would pay a half-interest in the equity of their respective retirements to Karen on the same five year schedule. This idea was not the result of a mere off the wall concept, but rather the careful consideration of the parties as to how the law would apply and a willingness to compromise to resolve a conflict, rather than rehash it in family court litigation.