What Is a Fair Divorce Financial Settlement? Child Support & Alimony Come Down to Dollars and Sense
When it comes to alimony and child support, most divorcing couples are concerned that their agreement be fair. However, in my experience as a divorce mediator, both parties are most successful when they focus on the dollars first, rather than the sense. In other words, focus on what’s possible as a prelude to discussing what is fair.
Accept that there will be alimony and/or child support
The first step in the process of negotiating your financial settlement is accepting that there will be a transfer of money. This is unavoidable in most cases, particularly when there are minor children, the marriage was a long one, and/or spouses have substantially disparate incomes.
Child support is governed by state statute, which sets the mandatory, minimum child support obligation for both parents in a divorce. By law, parents cannot opt out of this. Where I practice mediation in Maryland, DC, and northern Virginia, there aren’t mandatory state guidelines for alimony. When parties don’t reach their own agreement, then the alimony award is left to the discretion of the court. There are many factors a judge will consider before ruling on alimony – including both parties’ financial needs and available resources, employment history, age, health, contributions to the marriage, and other factors. Litigating these issues is typically a highly contentious, not to mention expensive, endeavor. And, ultimately, a judge’s ruling feels arbitrary and unfair to the payor or the payee, and often both!
Figure out what’s possible given your finances
So I recommend taking a practical approach: do a thorough accounting of your income and expenses, assets and liabilities. This will allow you to figure out what is possible given your financial situation.
Most of us groan at the idea of creating a budget, but in my work with divorcing couples I find that taking detailed stock of the financials of “life after divorce” to be an invaluable tool for creating consensus around child support and alimony. Focusing the budget on non-discretionary expenses and projected incomes enables us to see what is possible. It’s harder to reach agreement by starting with what is fair, because what’s fair is a matter of opinion and not always possible.
When I guide my clients through this budgeting exercise, I use software that makes the calculations easy and also factors in appropriate taxes. If you want to try this on your own, I recommend you create an Excel spreadsheet with two columns, one for each party. Start by entering your income (or realistic potential income) and then list your non-discretionary expenses, i.e., the cost of what you each need to live: housing, food, transportation, etc… Then list the non-discretionary and discretionary expenses for your kids: both what they need to live, and expenses related to things you want to provide like private school tuition or sports fees.
What is left over with which to be fair?
During the mediation process, many couples (even those who make considerable income) find that meeting their mandatory expenses, and then providing for their kids, is a challenge. If this is the case for you, consider that for you “fair” may mean simply ensuring that you can both live reasonably and provide your kids with the opportunities that are important to them (and to you). The budget may also reveal that, given the new reality of your situation, one or both of you need to make more income, or temporarily take on some debt.
If your budgets balance with money to spare, then you have narrowed the field to consider what fair means to you and your spouse. Be mindful that in seeking what is “fair,” what you may really be doing is trying to make alimony or child support carry the hurt you feel for wrongs committed in the marriage. If retribution and punishment are your goals, they will likely prevent you from reaching an agreement with your spouse and allow the strife of your divorce to carry forward into the future. Ultimately, happiness is an inside job – best achieved by minimizing protracted conflict and focusing on self-care, emotional support and the passage of time.
By putting the possible first, you can make sure your alimony and child support agreement focuses on the future, not the past. In the wake of all the hurt you’re experiencing, it can be difficult to see the value of being practical. Yet the sooner you can turn your attention towards the next chapter of your life, the sooner you can leave behind the one that’s ending.
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