How to divide property (which includes any and all assets such as homes, retirement accounts, bank accounts, etc., as well as debts) during a divorce is a big concern, and many couples have questions about how this can be done “fairly.” It seems that everyone wants to be fair during a divorce, but individual opinions about what is fair can be diametrically opposed. When not handled properly, differing opinions on a fair division can escalate what could have been an amicable divorce into an adversarial one.
I remind people with whom I work, whether as a mediator or as a coach, that “fair” is a subjective term. When explored, it often turns out that a person’s opinion of fairness evolves from their perspective and interpretation of how things have gone during their marriage. But always keep in mind that it’s not for me or anyone other than the couple going through the divorce to define what is fair. Fairness is a concept that should be carefully explored, and with the help (not the opinion) of the properly experienced mediator, to come up with enough well thought out alternatives so that a fair solution, satisfactory to both parties, presents itself.
A fair solution may or may not be perfect. For some couples, a fair solution means coming up with an agreement that you equally like or equally dislike, but one that addresses the main desires and goals of both parties. This is where a good mediator or coach can really help. There are all kinds of variables that can come into play when dividing assets, and people need to know all of their alternatives.
For example, I have worked with couples who didn’t know that they could continue to co-own real estate after a divorce, either indefinitely or for a defined period of time. They assumed that they had to sell the property or that one of them had to buy out the interest of the other. Each person’s idea of fairness dictated that their position was the fair solution. But with enough discussion and exploration of the “fair” result, a unique solution can be tailored. The same is true for things like business interests, time shares, etc.
Retirement accounts are also a big issue. For some individuals, their retirement account is something to which they are almost physically attached. But not all retirement accounts need to be dealt with in the same manner during a divorce. For example, some retirement accounts should be appraised, others don’t need to be – some should be divided, and others don’t have to be. The important thing is that both parties have an understanding of what they can and cannot do within the framework of California divorce law, and then consider how to find the unique division that will satisfy each individual’s desire for a fair division.
When a fair solution is discovered, your work is not done. Once you come up with a scenario that is equally liked, or disliked, the next step is to draft an agreement so that both individual’s interests can be properly protected.
One of the huge problems with using templated divorce forms is that people assume that just because they have managed to cram their information into the template and it is accepted/filed by the court, that their interest is adequately protected. The reality is that in many cases, that is not the case. The acceptance/filing of your agreement by the court only means that it satisfied the basic minimum requirements set forth by the court. For the great majority of cases, when the paperwork is filed with the court, the court clerk looks it over and then it is passed to a judge for signature. This cursory review of what can be complicated issues may mean that your interest in your house or your retirement accounts or any other asset may not actually be protected. This is where having a well-drafted settlement agreement can save you thousands, tens of thousands, or even hundreds of thousands of dollars and a lot of unnecessary stress in the long run.
A true cost-benefit analysis of your assets can help determine what is fair in your situation and whether templated divorce documents will suffice. What is it that you are protecting through your agreement? If it is a relatively inexpensive item, then there is not much to risk, then a template may suffice as you don’t have much to lose if it turns out that your interest was not adequately protected. But if you are protecting an interest in something of value, a properly crafted settlement agreement will help secure your interests once you and your spouse have come to a decision about how to divide your property.
Whether you need help in determining how to fairly divide your property, or you need an agreement that adequately protects your interests, or you would like someone to review a previously-drafted agreement, we can help. Give us a call at 1-800-359-7004 to discuss how we can help you arrive at a fair and effective property distribution solution.