In my last article, I discussed the principal issues that need to be discussed during the divorce mediation process.
- Equitable Distribution
- Personal and real property
- Children: custody and parenting arrangements
- Child support
- Spousal support
Some additional issues that may need to be addressed by the couple, depending upon their specific circumstances, include:
Medical insurance coverage: Medical coverage and expenses are of great concern to everyone these days. With a married couple, the spouse who is covered through his or her employer is often providing coverage for the other spouse and the children. While that spouse can continue to cover the children, once the couple is divorced, the other spouse will no longer be entitled to that coverage. COBRA allows a divorcing spouse to obtain his or her own health insurance through the covered spouse’s carrier, but the premiums are often extremely expensive. So there needs to be a discussion around this subject – what type of insurance the non-covered spouse can afford and what it will cost. Some couples even choose not to proceed directly to divorce, but to remain legally separated, so that the other spouse can continue on the existing plan.
Life insurance: If a couple has children, it is especially important to discuss life insurance. The couple should look at how much money they need over the years to raise their children, and what would happen if one of them should die. Could the surviving spouse, even if he or she is working, continue to pay for all of the children’s expenses? Often that answer will be no – or with great difficulty. This issue is even more important if one of the spouses has been a stay-at-home parent or earns much less than the other. So it behooves both parents to talk about this during the mediation process. Assuming they are able to pay for the insurance premiums and qualify for life insurance, this is an important safeguard to put in place to ensure the ongoing financial security of their children.
Taxes: There are a number of tax issues that need to be discussed when a couple is separating or divorcing. They will need to address how to handle possible liability on joint tax returns that were filed in the years preceding the separation or divorce. Additionally, the couple needs to be aware of their tax filing status going forward – which is determined by their marital status on December 31st of each year. If they are not legally divorced by December 31st, then they can still file a joint return; this normally results in their paying the least amount of taxes. However, if they are divorced at any time during the calendar year, they will have to file separate tax returns for that year and, of course, going forward. Another discussion point will be how they decide to allocate the dependency exemption for their children on their tax returns. It’s best if the couple checks with their accountant or other financial professional to help them make decisions that will maximize the tax benefits to both of them.
Debts: In addition to discussing the assets of the marriage, the couple also needs to discuss any debts they may have – whether they are joint debts or debts that were taken on individually during the marriage. Debts may include bank loans or personal loans, credit card debt, student loans, mortgage loans, etc. It’s important that they determine who will be responsible for the payment of each debt that’s owed, or whether they will both share in paying a portion of some of the debts. Certain joint debts (such as joint mortgage obligations or credit cards that are held in both names) may remain “legally” as a joint obligation. However, as between the two of them, the couple can designate separate responsibility for these obligations in their settlement agreement.
Mediation allows for a degree of creativity when dealing with these issues that is absent in litigation. As an attorney-mediator, I can help you think outside the box when searching for solutions to these issues.