Divorce

In April, 2018, I was a speaker in two presentations at the Make Divorce Healthier Symposium — “Coaching to Enhance the Healthy Divorce Process” and “Strategic and Smarter Property Settlement Agreements.” Here are my remarks about emotions and divorce financial negotiations from the session on property settlements.

My co-presenters Samantha Evian, James Graves, Ellen Morfei, Loretta Hutchinson covered the nitty gritty of what equitable distribution means in PA, legal and financial case studies, and financial forecasting. I kicked off the session with the mediator’s perspective and a call for sensitively incorporating the emotions of the spouses into the financial negotiations. This is the text I used to guide my presentation.

I can’t tell you how often new clients come to me and tell me “we just want to split everything down the middle.” Then I get to meet with each of them. I talk to them both privately. And I review their finances. And I learn that they have different goals, different emotions, different cash flow, different earning power. So, if so many things are different, why do they both THINK that they want the same settlement?

All of this reminds to me of a story…

Do you know the famous short story “The Gift of the Maji” by O. Henry? It’s about a young couple of modest means at Christmas time. Both wants to give a special gift to the other, but they have little money to do so. In short, he sells his beloved pocket watch to buy her an ornamental comb for her beautiful hair. She cuts and sells her hair to buy a chain for his pocket watch. Even with a happy couple who is very much in love, knowing only half the story can have tragic consequences.

In a divorce, this same issue of knowing the view only one side – their emotions, goals, interests, feelings, and positions – can yield similarly undesirable outcomes. As a mediator, I’m luck to got to hear from both spouses in a divorce. But once you know all this, how can you help craft an agreement that accommodates, to the extent possible, the interests of both sides?

As a mediator, it’s critical that I support both sides in reaching an agreement that works for each spouse. But, even amicable divorcing couples have divergent interest – along with shared interests like the well-being of their kids and each other.

I’m going to leave it mostly to my colleagues to address some of the specific financial vagaries between divorcing spouses and how those might be addressed in property settlement negotiations. I’m also going to leave it to them to discuss the nexus between behavior and cognition and how it can undermine good decision-making.

What *I* want to do is pause and recognize some of the emotional issues that can influence the property settlement agreement. I think the typical perspective on emotions in property settlement negotiations is that emotions need to be managed and minimized – that decisions infused with emotions are bad decisions or inferior to decisions made “rationally.” I would never argue that emotions should be a primary driver in crafting a property settlement agreement, but a couple CAN reach a creative, effective and equitable agreement that honors the emotions of the parties.

And, although I don’t have data to support this, I have a keen sense of two things. One, is that when emotions are honored, parties are more satisfied with their agreement. (Note there is data to support greater satisfaction and compliance with mediated agreements.)  Second, that parties that feel better about their agreement and the process used to reach it are in a better position to enter their post-divorce life with a sense of hopefulness and self-efficacy.

Some examples of emotions or emotionally-loaded issues in divorce that can be effectively considered when crafting a property settlement agreement are:

• Fear of change/uncertainty (will be discussed much more by my colleagues)
• Fear of finances/financial illiteracy
• Fear of possible destitution or other financial tragedies (“I don’t want to end up as a ‘bag lady’”)
• Risk tolerance
• Tolerance/attitude toward debt
• “Symbolism” of debt in the marriage – how was it acquired
• Other “symbols” in marriage – I never wanted the house, boat, Lexus, or to move near his mother
• Desire to retire early
• Desire to keep “my retirement” money
• Concern for supporting the kids in college and into young adulthood, may include weddings
• Desire to keep the house – often underpinned by the desire to minimize disruption for the kids

The emotions – in general or around specific issues – can be honored in the agreement How?

• Riskier assets retained more or fully by one party
• More of retirement held by one party
• More cash flow (or liquid cash) held by one party
• Creative financing or buyout structure for the family home
• College or other designated funds created for the kids
• Debt retained more or fully by one party
• Specific debts retained by one party
• Specific assets to one party – the boat, the Lexus

Having said all that, feelings should not be honored to the detriment of an equitable settlement or sound finances. We can get creative, but we can’t please everyone all the time. And, as I often say, I can help you figure out all sorts of ways to slice up your pie, but I can’t make your pie bigger. I’m a mediator, not a magician.

But with creativity and collaboration, one can guide clients to reach prudent financial agreements that honor their individual interests, their goals, AND their emotions.