People who divorce in middle age have different issues to resolve and may be more amenable to participating in a less adversarial process. The couple has lived together for many years — even decades. They have witnessed the changes in their lives and in their children’s lives together. They share countless memories. They look upon the future with some trepidation, not with the reckless abandon of youth, because they know that they no longer have a lifetime to rebuild. They may have more incentive to maintain a friendship, even as they terminate the intimacy of day-to-day living in the same space.
The professionals involved in the divorce process – the attorneys, the accountants, and the therapists — may be able to assist them in honoring that friendship as they go through the steps necessary to obtain a legal divorce.
The family law accountant may meet with the couple as a neutral third party– with or without their attorneys present—in order to outline the financial issues. The meeting can take place at the accountant’s office or in the couple’s home at the kitchen table. The accountant needs to become familiar with their lifestyle in order to help them forge a plan for the future. There are several financial issues that need to be addressed in a straightforward manner with input from both of them. It’s beneficial that each of them be able to express their hopes and fears, so that a reasonable and equitable plan may result from the discussions.
The typical issues are discussed in broad strokes at the first meeting, with subsequent meetings designed to focus on the details of one or more of the issues. It’s crucial to create a list of the issues without becoming mired in controversy. The overriding concern is to maintain the friendship: keep them talking about the things they love, not the points that divide them. Insist on maintaining respect and civility in the meeting. Call on them to refrain from accusatory and belittling remarks, and when the negativity creeps in to the conversation, remind them that it’s not productive. The stronger they are emotionally while going through the process, the more likely they will greet the tough decisions with equanimity and in the spirit of compromise.
Clearly, this approach to the divorce process is most successful with cooperative couples. For those with power and information imbalances, each of them will require separate meetings with the accountant, attorney, and/or therapist. If there are custody or visitation issues, the couple should consult therapists or attorneys first.
The following is a typical list of issues to be discussed at the first meeting. Some of them will have already been decided by the couple by the time the accountant arrives. Some will be points of contention. Others may be new challenges that the couple has yet to consider:
- Who stays in the family residence? How is the equity divided and when? Can the party who wants to stay in the house afford to? Can the house be refinanced and, if so, under what terms? If the house is to be sold, when? If the house belonged to one of the parties before marriage, how much credit does he or she get?
- What is a fair estimate of the income of both of the parties? If one of them is not currently in the workforce, can we reasonably expect that to change? If so, when? If one of them needs education or training, how will it be financed?
- How much support will be required to maintain the status quo for a short time? How long will this temporary support last?
- If there’s a business or professional practice, what information do we need to gather to come up with a valuation?
- How long do they expect to remain in the workforce? What retirement programs are already in place? How do they go about collecting more information about the amount of retirement income they can each expect? How much can they expect to collect from Social Security and at what age? How do we go about dividing the retirement plans –IRAs, Roth IRAs, pensions, etc.?
- If there are children about to go to college or are currently in college, how will they fund these expenses? If there are non self-supporting young adults at home, who will be responsible for their maintenance? How much should be allocated and for how long?
- If there are parents currently in need of custodial care or assisted living, who will be responsible for their expenses and for how long?
- How do we go about dividing the brokerage accounts and savings accounts? If some of funds came from inheritance, how do we divide those equitably?
- If there are wills and trusts in place, when should they be changed? How much life insurance should be maintained and who should be the owner and/or beneficiary? What about their plans for the grandchildren?
- If they have jewelry, antiques or other collectibles, how are they to be divided?
I recommend regularly scheduled meetings, two or three weeks apart, in which we consistently work on the issues we have outlined, maintaining a fair and conciliatory attitude throughout. After the couple leaves my office, I draft a letter to each of them that has the same list of issues each time. Sometimes new issues are added. Within each category, I specify the agreements that were made during the meeting.
When the couple is satisfied that they have agreement on most of the issues, they take a copy of my letters to their collaborative (or consulting) attorneys for review and comment. They may return to my office with their attorneys’ concerns for another meeting, or I may have a telephone conversation with both attorneys on the line. In either case, the couple is usually well on their way to a final agreement by that time.
The next time I hear from them, hopefully, is because they are asking me to review some tax ramifications of the agreement and, by the way, to learn about the great visit they just had together with their grandchildren.