This is our dog, (Sir) Winston and our cat, Thundercloud. They are camped out in my home office. Our human children are grown and off on their own, so these guys are the “kids” in the house. And we love them very much (almost as much as our real children).  

After all, who doesn’t love their pets?

For years, it seems that the legal system has viewed pets as property, while, in reality, our pets are much more to most of us than possessions.

This is why any divorce mediation I conduct includes a discussion about pets. For years, it seems that the legal system has viewed pets as property, while, in reality, our pets are much more to most of us than possessions. They live and breathe; they require love and attention; they require food, shelter and trips to the veterinarian. Sounds like children to me, except for the clothing and perhaps the attitude (although Thundercloud has more attitude than our kids ever did, combined).

Any conversation about pets is likely to include these questions:

1. What is the plan for daily care (especially important for dogs)? 
2. What is the plan for where they will live? Will they move between homes, and if so, on what kind of schedule? 
3. What is the plan for expenses, especially veterinarian bills?

In some states, like Illinois, the ownership of and responsibility for a pet who was adopted or acquired during the marriage can be decided by a court, awarded either solely to one spouse or jointly to both. In making these decisions, the well being of the pet is considered.

Because pets matter, and because they deserve thoughtful planning just like all the other aspects of divorce, mediation creates a neutral setting where these decisions can be discussed, taking into account the needs of the spouses and the needs of the pets.

Divorcing couples face uncertainty as they attempt to reach decisions on how to move forward with their lives. Mediation creates an opportunity to address that uncertainty through dialogue that is facilitated by a neutral mediator. 

A successful mediation outcome establishes a plan that, by definition, provides both spouses with greater certainty about their futures. Important decisions are made about how to divide and distribute the assets and debts of the marriage.

Planning for the Present
There are aspects of the mediated plan that relate to parenting arrangements and financial support. These decisions affect the immediate circumstance of the family and increase certainty and understanding. But life, by its very nature, involves change—different jobs (or unemployment), fluctuations in income, altered schedules, and new residences, to name a few. All these can require adjustments to an established plan.

Modifying the Plan 
Laws pertaining to parenting arrangements and financial support include provisions for modifications to parenting plans, child support and spousal maintenance. After a divorce settlement, there is generally a requirement that the person who is requesting a change must apply to the court and demonstrate that the change is significant enough to warrant a court review.

The mediation process allows for more flexibility and foresight to anticipate change and plan specifically for how future circumstances may affect current arrangements established by the divorcing couple.

Fortunately, the mediation process allows for more flexibility and foresight to anticipate change and plan specifically for how future circumstances may affect current arrangements established by the divorcing couple. Anticipating future changes that may affect child support or maintenance payments, for example, many clients will develop a specific formula for determining how they will modify the amounts being paid. This allows for a clear path forward and clarity amidst unpredictability, avoiding the need for future court action. In some situations, clients simply agree to renegotiate with each other, using mediation as a fallback option if they are unable to come up with an agreement on their own.

Mediation’s Advantage
The flexibility to anticipate and accommodate change in the present is one of many advantages of using a mediation process. The time spent now to address how to adapt current agreements for future contingencies can pay off in reduced stress and less time and money required to resolve issues in the future.

As discussed in last week’s blog, divorcing parents face three important sets of decisions as they consider future college expenses, namely (1) saving for the future; (2) determining parental vs. student financial responsibility; and (3) allocating parental responsibility.

In divorce mediation, how parents address decisions about future college expenses for their children depends on the age of their children, the anticipated continuing resources available to the parents and attitudes toward future commitment.

In mediation, how parents address these decisions depends on the age of their children, the anticipated continuing resources available to the parents and attitudes toward future commitment.

Let’s explore three different approaches.

The Detailed Plan

This strategy works well for children of any age and usually requires parents to be able to plan realistically for future resources and be willing to make a commitment and stick to it. In this plan, parents have these options:

• Determine a periodic (monthly, annual) contribution to a dedicated college savings plan for each child by each parent (perhaps in proportion to income, or as otherwise agreed upon).
• Determine the parental contribution, whether as a percentage of the total college expenses, subject to an overall maximum (for example, tying the parental contribution to the cost of in-state tuition, fees, room and board), or specifying that only certain expenses will be covered by the parents (i.e., tuition). Some parents may include “accountability” provisions relating to a child maintaining a certain grade point average. It’s important to define how parental savings, other family member contributions, grants, scholarships and financial aid that is not in the form of a loan will count toward the parental contribution.
• Allocate the parental contribution, which could be in proportion to future income, shared equally or decided according to some other mutually agreed upon formula.

In some divorce mediation cases, parents create a plan that includes one or two of these options but not all three.

This strategy offers the benefit of certainty, while carrying the risk that unforeseen circumstances could affect the plan being followed by both parents. This could invite future conflict and misunderstanding.

The “Plan to Plan”

This strategy works better with younger children, where parents aren’t able to feel certain enough about the future to make a commitment now.  

Essentially, this involves the parents scheduling a future time (usually during a child’s enrollment in high school) to discuss the topics of parental vs. student contribution and the allocation of the parental contribution.  

This approach doesn’t force parents to make a commitment that they may be uncomfortable about making presently but still provides a deadline for addressing college expenses. Of course, there is a risk of future disagreement. For parents who aren’t enamored with the idea of having to discuss financial issues post-divorce, this may not be workable.  Establishing provisions for future dispute resolution is also important to the success of this kind of planning.

No Commitment

This strategy works best where uncertainty is the greatest and resources are limited.

Most parents want to help their children financially in some way, yet the financial challenges of divorce can be significant enough to affect a parent’s ability to make a promise that may not be kept.

When parents choose this path, they are not abandoning their children financially. Instead, they are saying that, while they will do what they can to help, they don’t want to be bound by a legal agreement to any specific plan for paying for college costs.

The benefit of this strategy is that the risk of breaking a promise later is eliminated, as there are no promises being made. The risk relates to what can happen in the future if one parent expects the other parent to contribute to college and that parent is unwilling to do so. While courts can order parents to contribute to a child’s college education, how a court would address this when the parents agreed not to make a legal commitment is not clear, and the prospect of going to court does not usually appeal to divorce mediation clients.

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A fundamental part of the divorce mediation process is to allow for exploring options and identifying needs and interests that can be met by each option—with the end goal of a decision that best meets those requirements.  

For many families, the future cost of a college education for their children will overshadow all other childhood expenses. So this is an important conversation for parents whether they are married or divorcing. In the circumstance of divorce mediation, my role is to place the topic front and center for discussion.

In the circumstance of divorce mediation, my role is to place the topic of financing your children’s college education front and center for discussion.

In my view, financial decision-making involving college education costs centers around three topics.

Saving for Future College Expenses

According to U.S. News & World Report, the average cost for tuition and fees alone for the 2020-21 academic year was $41,411 at private colleges and $11,171 for in-state residents at public colleges. This does not include room and board and other expenses, such as travel and books. For a four-year education, the price tag is substantial.

Where resources allow, many families will commit to a savings strategy for college. Many take advantage of 529 college savings plans, which allow for the earnings on savings to be tax-free as long as these funds are used for qualified educational expenses. For families who expect to qualify for financial aid, maintaining a 529 account may result in a small reduction in a future financial aid package.

Divorce mediation involves planning for the future of two separate households, so a college savings plan—when feasible in light of other expenses—will form an important component of the overall parental financial plan.

Parental vs. Student Financial Responsibility

Each family is faced with a decision that revolves around how much of college should be paid for by parents and how much by the child who is attending college. In my experience, there are many factors that may influence these decisions:

1. If the parents attended college, how was it paid for?
2. How much “buy-in” do parents expect from their children for college?
3. Are there savings or other resources (for example, from grandparents) available?
4. Will the child qualify for grants or scholarships, either based on financial need or on merit?
5. Viewpoints on student loan debt. (Note: according to U.S. News & World Report,  the average student loan debt for an undergraduate education is now over $30,000.)

Allocating the Parental Contribution to College Costs

Once parents have determined how much they are willing/able to spend for college education, they must also decide how to split the cost. This may create discomfort, as there can be uncertainty about future resources that makes parents reluctant to commit to future expenses at the time of their divorce. When parents are able to make the commitment, other issues that need to be addressed will include how existing parental savings will factor into this split and how income and resources will affect the split.

Watch for the next post, where I will share alternative methods within mediation for approaching these important decisions about financing a college education.

As the tax filing deadlines approach, many of us are encouraged to think about tax planning for the year ahead. No matter what time of year it is when you are facing divorce, it’s the right time to think about taxes.

Your filing status will change in the year of your divorce, and this change will affect the entire year. So even if your divorce isn’t finalized until later this year (for example, in September), your new filing status will be in effect for all of 2021, and this will be your filing status when you file your taxes next year for 2021.

While you are married and filing joint returns, it’s very possible that a lot of taxes are withheld from one spouse’s paycheck but much less from the other’s pay. Since this is all added up at tax time, the net result may be fine, in that no taxes are owed or there may even be a big refund. But what happens now, if you are the person who did not have much taken out of your paycheck?

Here is an example:

John and Susan are getting divorced. John’s gross income is $100,000 per year ($3,846 biweekly). John has federal taxes withheld based on being married with two children claimed as dependents.  

Based on the IRS Federal Tax Withholding Tables, John would have $175 in taxes withheld from each bi-weekly paycheck for a total of $4,550.  

When John files his taxes for 2021, he is now filing as a single taxpayer, and he and Susan have agreed to each claim one child as a dependent.

John takes the standard deduction, since Susan is keeping the house and paying the mortgage, so he doesn’t have enough deductions to itemize.

And based on the tax rates for single taxpayers, and even with an increased child tax credit for 2021, John’s federal taxes will be $12,067, meaning that he will owe the IRS $7,517!

It’s essential to plan for the tax changes that will happen when you are getting divorced. 

Now, this may be an extreme example, as perhaps John was having extra money withheld voluntarily from his paycheck. But the lesson to be learned here is that it’s essential to plan for the changes that will happen when you are getting divorced.  

If you are getting divorced, this is what you can do NOW:

1. Adjust your payroll withholding. At a minimum, you can change your withholding status to “single” and claim no dependents. For a more precise strategy, contact a tax professional, and be sure to have your most recent pay stub.
2. Adjust your household budget to acknowledge the reality that your spendable income may be reduced because your taxes are going up.  Use this information to determine how this might affect your future needs as it relates to providing financial support for your children or spousal maintenance payments.

Using my skills as both a divorce mediator and experienced finance professional, I will help you think through what lies ahead, including how your tax situation may change and what steps to take to prepare.

Divorce mediation clients sometimes come to me believing they already have complete agreement on the issues that need to be resolved for them to move forward with divorce.
More often, however, the mediation process helps them to make mutually acceptable decisions they were unable to agree on themselves. By exploring these issues fully we can come to the best agreement for both parties.

Some clients don’t consider mediation at first, believing they must be substantially in agreement on all the issues for mediation to work. A new client recently called me to say that she and her husband had decided not to come to mediation, since they hadn’t worked through all the issues that they wanted to resolve for their uncontested divorce. That left me to wonder about this misconception: how many couples think they can’t come to mediation until they already agree on how they are going to live apart?

Mediation is the opportunity to use my training and experience to help you work through the many important issues and decisions that you face. Of course, it is always good when we begin mediation with some common understandings, but it is certainly NOT a requirement to have reached agreement on every issue.

As I explained to this new client, mediation is the opportunity to use my training and experience to help you work through the many important issues and decisions that you face. Of course, it is always good when we begin mediation with some common understandings, but it is certainly NOT a requirement to have reached agreement on every issue.
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Separation and divorce carry uncertainty and fear that can often interfere with our ability to “be on the same page.”  Whether you feel you have discussed every option or you are not sure where to begin, an experienced mediator can help you both gain the focus to think clearly and speak freely in a safe environment. As mediator I am not the judge, but, rather, I am your trusted host in the conversation, turning your contested issues into a mutually agreed-upon understanding that will lead to an uncontested divorce.

In an effort to address the economic impacts of the Coronavirus pandemic, Congress has approved and President Biden has signed the American Rescue Plan Act of 2021.

Among the many provisions of this act, there are some that are particularly relevant for divorce mediation clients who are negotiating taxes.

What You Should Know

1. A new round of stimulus payments (full amount) will be sent out to taxpayers who have Adjusted Gross Income of less than: a) $150,000 per year (if filing jointly). b) $112,500 per year (if filing as head of household). c)  $75,000 per year (if filing as single). Lesser amounts are paid for joint incomes between $150,000 and $160,000, heads of household incomes between $112,500 and $120,000, and single taxpayers with incomes between $75,000 and $80,000. The full amount of the stimulus payment will be $2,800 for those filing joint returns, $1,400 for those filing as single or head of household, plus $1,400 per dependent child. Unlike previous stimulus payments, dependent children can include college age children who are still supported by parents.
2. The child tax credit for 2021 will be substantially increased from $2,000 per child to $3,000 per child. (And for children 5 and under, the credit is $3,600.) The child tax credit will also be available in 2021 for children up to age 17. (This used to end at age 16.) The increased child tax credit phases out at income of $75,000 ($150,000 for joint returns).
3. The child tax credit will be fully refundable. This means that, for single parents who have a low tax liability, they can receive the full amount of the child tax credit. This is a big change, since previously, in negotiating which parent claimed children, the parent with a lower income may have decided to let the other parent claim the child(ren) since the other parent would get the full tax benefit.
4. Health insurance costs under the government health insurance exchange will be capped at 8.5 percent of income through 2022.
5. The maximum credit for dependent care (i.e., child care) will be increased for taxpayers with incomes up to $125,000.  

Timing
Some of these changes will only be in effect for 2021, unless extended by Congress.

Overall, for many divorcing couples with children who are facing the economic challenges of transitioning from one household to two, the American Rescue Plan Act of 2021 should provide significant short-term economic relief.

Overall, for many divorcing couples with children who are facing the economic challenges of transitioning from one household to two, the American Rescue Plan Act of 2021 should provide significant short-term economic relief.
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As with all decisions involving taxes, consulting a tax professional is encouraged.

Divorce can be a tough and trying emotional experience. There are no easy ways of coping with that anguish, uncertainty and emotional turmoil. Mediation, as a process, is designed to keep a challenging transition from being even more stressful. But what else can be done on a daily basis to deal with the stress of divorce? 
 
In researching the topic of depression, I came across a behavioral therapy acronym called “GRAPES”. Embedded in this simple word are some helpful daily tips that can be applied to everyone’s life, especially those in the midst of divorce.

G stands for Gentleness
R stands for Relaxation 
A stands for Accomplishment
P stands for Pleasure
E stands for Exercise
S stands for Socializing
 
Let’s explore how you can make GRAPES work for you in your daily life while going through a divorce:
 
Be gentle with yourself.
During difficult times, we can be very hard on ourselves. By doing just the opposite—being kind to ourselves—we can help ourselves move forward and not dwell on the disappointments of the past.
 
Even if we only spend a short time each day doing something relaxing, it can help us to find our own emotional equilibrium. 
 
Find time for relaxation.
Yes, life is busy, but even if we only spend a short time each day doing something relaxing, it can help us to find our own emotional equilibrium. Pausing to read a fun article, listening to music, playing with a pet and enjoying a hobby are a few possibilities.
 
Accomplish something today.
This doesn’t have to be a big deal. When we look at something we’ve done (make a list of simple tasks and cross them off as completed), we are reminded that it is a symbol of progress. Even filing that stack of papers, deleting unwanted emails or putting away accumulated clutter is progress. Any small accomplishment is worthy of note.
 
Do something that gives you pleasure.
We are allowed to have fun even when we’re not at our best. Find something to do that you enjoy, from taking the time to enjoy a cup of coffee to connecting with friends.
 
Get some exercise.
This can be as simple as taking a walk. Exercise is good for our bodies and can stimulate our minds in a very positive way.
 
Socialize with others.
In the time of Covid-19, this goal can be a little harder to satisfy. But by spending some time with others on a socially distanced walk, on Zoom, by phone or perhaps through Meetup-com or other social platforms, we can overcome a sense of aloneness that is often present during divorce. This is a time to expand yourself socially as much as the current situation allows.
 
Gentleness, relaxation, accomplishment, pleasure, exercise, socializing—whether you are in the midst of divorce or just in the midst of life, these are tips that can make your days go better.

As I think about the mediation process—involving both my clients and me—the act of asking questions looms large.

For the mediator, asking questions is the gateway to understanding what the goals of each spouse are as they discuss the details of how to end their marriage.

I’ve also found that questions that are asked by one spouse of another can transform a history of ineffective communication into a constructive opportunity to understand.

On the other hand, a question that is asked in a self-serving way or which otherwise may cause someone to feel vulnerable or made to look bad can derail the conversation.

Several years ago, I participated in continuing education that addressed how we can use questions to better understand each other. The presenter, Sharon Strand Ellison, author of Taking the War Out of Our Words, focused on the dos and don’ts of asking questions.

My biggest takeaway on the “do” side of asking questions is to come from a place of curiosity. When we demonstrate curiosity, we are signaling to the other person in a conversation that we are interested in what the other has to say. And so for the one hearing that question, s/he can then think, “I am being invited to share.” That can be very freeing for someone who may be used to hearing questions that sound more like an interrogation—where controlling behavior has been a symptom of the marriage.

A good question, coming from genuine interest and curiosity, can often unlock a door behind which may lie many answers…[those answers] may build a foundation for learning where the other person is coming from…thereby furthering a conversation about options for meeting both spouses’ needs as they plan for separate lives.

A good question, coming from genuine interest and curiosity, can often unlock a door behind which may lie many answers:

• The other person’s understanding of the details of a situation
• Clarification of something that the other person said
• Assumptions that have shaped that person’s views
• What the other person is feeling in the moment and looking ahead to the future
• The other person’s values and attitudes
• The intentions behind something that the other person said or did
  

Any of the above may build a foundation for learning where the other person is coming from, in terms of needs and interests, thereby furthering a conversation about options for meeting both spouses’ needs as they plan for separate lives.
As a mediator, using my curiosity to generate good questions allows my clients to express themselves and be heard. And together, we can use that dialogue to explore the future and create a path of promise and hope.

In the divorce mediation process, emotional readiness and financial information gathering may impact how fast or slow the process will proceed. In my work with clients I find that a typical financial issue that affects the pace of mediation is the question of the future of the couples’ house. Fortunately, there are steps to take and research that can be done by you to prepare for these discussions in advance.

For many divorce mediation clients, the marital residence becomes the center of the conversation, as it is often the asset with the highest value and most emotional attachment. 

The house is also known as the “marital residence.” For many clients, the marital residence becomes the center of the conversation, as it is often the asset with the highest value and the most emotional attachment. This sense of attachment can be the case for one or the other spouse, for the children or for the whole family. 
Two of the biggest concerns regarding the marital residence are these: 

• What is the value of the house?
• If one of us wants the house, can we modify or refinance the mortgage?

In many cases, addressing these concerns will require further research that can take some time to complete. 

You have a number of options for establishing a value for your house, ranging from a mutual agreement on its value (recent appraisal in connection with a home equity loan, online sources like Zillow.com, Redfin, etc.) to hiring one or more professional appraisers to provide an expert opinion on value. Some couples may wait to decide in mediation how to implement their valuation strategy; others have this done before beginning mediation conversations.
 
Unfortunately, in some cases, an outstanding mortgage and home equity loans may reduce equity to a minimal or even negative amount. 

Most clients who want to arrange for one spouse to be the sole owner and occupier of the marital residence will want to reconfigure the mortgage so that person is the sole borrower. In current economic conditions, banks are reluctant to allow a name to be removed from the mortgage. However, it is worth a try. Alternatively, refinancing the mortgage is an option. However, a bank’s willingness to lend will depend on the net equity of the house and the income of the borrower. Some clients arrange for refinancing by having a co-signer to bolster income.

In mediation, we will discuss all the options related to the marital residence, and you’ll get to make the final decision about what works best for your situation and future. It may take some time to explore possible refinancing options, but that research will contribute to a constructive discussion and a well-informed decision that will be worth the effort.