August 3, 2014

Arbitration and Collaborative Divorce

One hot topic of discussion in recent years has been whether arbitration is available within the Collaborative Law process. Now that Washington has enacted the Uniform Collaborative Law Act (UCLA), the answer is an unequivocal "no"—arbitration is not available within a Collaborative divorce.

The UCLA includes arbitration as a "tribunal" in its definitions, and prohibits Collaborative lawyers from representing parties in tribunals. Additionally, a Collaborative Divorce automatically terminates when a proceeding in any tribunal is started. (For those looking for the legal citations, see RCW 7.77.010(15) and also subsections (3) and (10), 7.77.040(4) , and 7.77.080.) There is no provision to allow parties to agree to bypass the statutory requirements.

Why does the UCLA prohibit arbitration during a Collaborative divorce? The Collaborative Law process is designed to help parties work together to reach agreements—in other words, the parties themselves are the decision makers while professionals provide them the structure and information to make solid decisions. Collaborative Law is highly successful at helping parties reach consensual agreements. By contrast, arbitration is designed to obtain a decision from an outsider—the arbitrator. As defined by law, the job of an arbitrator is to "render an award" which is enforceable like a court order. Like a court order, an arbitration award is an imposed outcome based on the arbitrator's assessment, and not the parties' own standards. In other words, arbitration is designed as an adversarial proceeding in which the arbitrator decides between two parties who cannot agree. (For legal citations about the role of the arbitrator, see RCW 7.04A.010(2) and 7.04A.250.) The goal in Collaborative Law is to work constructively towards an agreement that all can accept, while the goal in arbitration is to adjudge which arguments win and which lose.

The work of the lawyers (and other professionals) also differs between Collaborative Law and arbitration. Collaborative Divorce lawyers help empower and support their clients to be able to work constructively together towards a mutually acceptable agreement. By contrast, lawyers in arbitration create arguments and marshal evidence to persuade the arbitrator, with the goal of getting a decision that is desired by their own client regardless of its acceptability by the other party.

In many ways, the prohibition on arbitration in Collaborative Law proceedings is merely a clarification of the scope of the disqualification requirement for Collaborative Law cases. (See RCW 7.77.080.) Disqualification creates strong incentives to behave in a manner most conducive to reaching agreements and to work diligently towards reaching agreements. Disqualification also removes incentives to act in a manner that runs contrary to reaching agreement. Eliminating the "easy out" to litigation/arbitration increases the likelihood that all will fully commit to the goal of reaching agreement, and that all will continue to work towards agreement after hitting normal rough patches that lie on the road to agreement.

With the UCLA being enacted, the risk of a case being steered to arbitration is no longer a possibility in Collaborative divorces.




May 4, 2014

Divorce Myths

It is amazing how many myths exist--and persist--about divorce. As a family law attorney whose sole practice focus is to help clients reach agreements, I regularly work with clients who have false beliefs about divorce. I suspect part of the reason is because each state in the United States has its own divorce laws; some of the myths might be the law in other states, just not in Washington State.

Here are some of the common myths about divorce:


*   Myth #1: The court divides community property in half and gives separate property to whose it is. Wrong. Unlike most community property states, when parties get a divorce in Washington, property (and debt) is divided and awarded based on a "just and equitable" standard. While the characterization of property ("separate" or "community"), and is considered as a factor when a court divides property, it is by no means binding. Unequal divisions of property and debt are not uncommon, nor is an award of one party's separate property to another when that is considered "just and equitable" under the circumstances. There is a long line of appellate cases that support this principle. Which is a long way of saying that what might be considered "just and equitable" on Tuesday in one courtroom will be different from what might happen on Wednesday in that same courtroom … let alone, in another courtroom.
 
* Myth #2: When a court awards spousal maintenance (alimony), it lasts 1 year for every x years of marriage. Nope. In Washington, there is no formula for either the amount or the duration of spousal maintenance. Over the years, I have heard formulas tossed my way (even from lawyers, who should know better) from one year of maintenance for every two years of marriage to one year of maintenance for every six years of marriage, and everything in-between. Not only are all these formulas wrong, but they are based on an incorrect premise that duration of marriage determines duration of maintenance. Instead, when a court awards maintenance, it does so based on what is "just" considering a number of factors (the statute lists 6 different factors, with the duration of the marriage being one of those factors and which is not singled out for a preference). I have seen 20+ year marriages with no spousal maintenance and 2 year marriages with many years of substantial spousal maintenance. Maintenance is a flexible tool. Some other myths about spousal maintenance: it also does not have to be tax-deductible to the payor and taxable to the recipient (though it's often structured that way), and it does not need to end on the remarriage of the recipient.

* Myth #3: Under the law, children get to decide with which parent they wish to live when they reach age z, regardless of what the parenting plan says. Incorrect. In Washington, children do not get to decide where they wish to live so long as they are children. Only when they reach adulthood (age 18) or are legally emancipated do they get to decide.

* Myth #4: Child support will be what is shown on the worksheet. Not so fast. The child support worksheet is only a supporting document that calculates a number based on a look-up table. That number is referred to as the "presumed" child support. However, the law requires another step when the court determines child support, which is to consider reasons for deviation. And courts frequently deviate (i,e., order a different amount of child support) if there is a reason, using a myriad of factors and a range of considerations. This is a reflection of the reality is that the look-up table reflects averages, so can only give what is really an arbitrary number. The worksheet is unlikely to reflect the actual costs associated with raising your child (other than maybe by pure luck and against the odds)--which is why I encourage parents to reach financial arrangements that ensure their children are cared for financially based on their circumstances, rather than some hypothetical average child that does not actually exist anywhere.

* Myth #5: A formula is used to determine child support when the children reside equally with each parent. Sometimes this is referred to as a "residential credit." Historically, this was once the case; however, a residential credit has not been part of Washington law for well over a decade--and if a court used that method for calculating child support today, the court would likely be reversed if appealed. Instead, the deviation for residential time alone is discretionary. And, while it might be expected that child support will decrease when a child spends lots of time between parents (such as a 50-50 plan), the deviation is not a foregone conclusion and the amount of the deviation is not based on a formula that spits out an arbitrary number. Instead, the "deviation" is based on the totality of the circumstances, and cannot leave a parent with insufficient funds.

There are certainly many more common myths about family law. It is understandable that many members of the general public have misunderstandings about divorce law--after all, they are trying to make sense of a system they have not studied. And, they may have heard things about other states which they assume are the case.

What is perhaps more perplexing, if not disturbing, is that there are more than a handful of lawyers who also seem to be taken in by these myths. I have heard each of these myths recited by lawyers as if they are absolute truths. These are the very people who are supposed to have studied the law and who should know better. Sadly, some do not.

December 25, 2013

Social Security Planning and Divorce

Recently, there have been many articles in news media about an increase in divorce among older Americans. Perhaps my own age has something to do with this, but anecdotally I too have been noticing more clients who are at retirement age or older seeking divorces. The age difference in couples raises different financial considerations when divorcing.

A Different Financial Outlook for Older Couples

For most people, divorce brings its financial challenges. In younger years, before most people hit their prime income earning age, the focus on the financial difficulties tends to somewhat short- to mid-term. The task tends to be on ensuring that the available income streams allow for two functional households, until higher incomes become available in the future--whether through promotions, salary increases, or one of the spouses entering the work force. A classic example might the need to have a single salary support two households while one of the former spouses gets retrained to be able to re-enter the workforce. The concept is that there is time for each spouse to get on their feet financially.

For older persons getting divorced, the outlook is different. The opportunity for increased income, or for a spouse to become re-educated to re-enter the workforce, is limited or nonexistent. For the older couple, the question often becomes how to make existing resources last during retirement and the remainder of their lives. When considering that many have not saved enough for retirement as a couple (whether due to circumstance or choice), the task becomes more challenging.

Social Security Benefits as Part of Financial Divorce Planning

When finances are tight, Social Security benefits can make a material financial difference during retirement. Social Security financial planning--taking the time to learn and apply the most effective strategies to maximize Social Security benefits--can make a significant difference.

While most know that there is a financial difference based on when benefits start (the AARP Social Security Calculator  can illustrate some of the differences), but many of the more sophisticated techniques are still relatively unknown.As noted above, for divorcing couples finances are more likely to be tight and, for that reason, good Social Security planning can make a big difference. While some techniques are available only to married couples, there remain options for divorced spouses.

Some Social Security Considerations and Options

Taxation

Social Security benefits receive preferable tax treatment, but are not tax-free. Consider the tax implications in the decision whether and when to take Social Security.


Timing

If you take Social Security benefits early (as early as age 62), your monthly benefit will be lower than if you wait. The longer you wait (up to age 70), the higher the monthly benefit. For divorce planning purposes, you need to consider cash flow, resources available, and your possible life expectancy. Based on average mortality tables, many financial planners recommend delaying applying for benefits if possible.

Spousal Benefits

If you are at least 62 years old, were formerly married for at least ten years and your former spouse qualifies for social security benefits, and you do not qualify on your own for a higher benefit, then you can apply for spousal Social Security benefits based on 50% of your former spouse's benefits at full retirement age. The actual benefit amount will change based on age, so it is worth considering the timing in your divorce financial planning. If you survive your former-spouse, you may also be entitled to survivor's benefits (unless you remarried before age 60).

Because social security amounts will be different, some divorcing couples agree that the spouse receiving the higher benefit will pay spousal maintenance (alimony) to the other.

Another option sometimes used is to file a "restricted application" to provide one spouse with spousal benefits while the other spouse's benefits continue to grow.

Filing and Suspending for Income to One Spouse

Prior to a divorce being final, if one spouse continues to work past normal retirement age while the other wishes to claim spousal benefits, there is a "file and suspend" option. The working spouse applies for Social Security benefits, but immediately suspends receipt. That allows the working spouse's benefits to continue to grow while the spousal benefit is received.

There Is No Substitute for Careful Planning

Every situation is unique, and the financial choice will therefore be necessarily different depending on your circumstance. What is not unique, and common to all divorces, is that good financial divorce planning can make a big difference for the future of both spouses.

September 2, 2013

Are You Seeking What Might Be Fair in Your Divorce? Consider Rethinking That.

Most of us want to be perceived as being fair. In your divorce, you are likely just wanting what's fair. Who can argue with being fair?  That's what makes "fairness" such a strange thing. In divorce, and in conflict in general, it is common to see one's own ideas as "fair" and the other's as "unfair."

In a quest to learn about fairness, many visit divorce lawyers asking about what might be "fair" or to what they are entitled. (Often, the two are assumed to be the same.) You'll likely get an answer. But, if you consult a different divorce lawyer, you're as likely as not to get a different opinion. The other lawyer could well say that something very different is what's fair. Your spouse's lawyer is likely to say that something different again is fair. And none of them can guarantee that a particular judge will agree. So, who is right?

If you ask your friends and family for their own view (not just to agree with your view), each of them will likely have a different belief about what is fair in your divorce. With all of these vastly different opinions, whom are you to believe? After all, you are just seeking what is fair, right?

Trying to ascertain what is objectively "fair" is a bit like chasing the end of a rainbow--you can never get there. "Fairness" is a completely subjective determination. No person has the one answer to what is fair; most of us believe that we are fair.


Think about what might shape your own view of fairness. In divorce, there are some common elements to consider that might bear on your own sense of fairness. Is your sense fairness shaped by your emotions about events or circumstances (for example blame, anger, guilt, shame, sadness, depression, optimism, etc.)? Is it shaped by the influences of others (for example, if a family member or friend says someone “deserves” x)? Is it shaped by your family of origin (for example, what was deemed fair between siblings when you grew up)? Is it shaped by your beliefs about the experiences of others (for example, if your heard that John Doe got a particular financial result in his divorce)? Is is shaped by your social or economic status, or the culture where you are from? Is it shaped about what you think about the undesirability of divorce? If you're being honest with yourself, the answer is likely "yes"to several of these factors.
 
When you think about it, with all of these factors influencing what people consider to be “fair,” it is hardly surprising that there is such a wide range of answers when trying to ascertain fairness. I might place a high value on classical music, while you might place a high value on hip-hop. While I may not consider it to be "fair" to be forced to listen to hip-hop, a hip-hop fan may consider it to be fantastic.

When asking other people what's "fair," you're just getting their personal preferences and not a universal truth. What is deemed "fair" to any person is truly unique to that individual—including you, your spouse, and every lawyer, judge, and other human being. If so, then perhaps asking what might be “fair” for your divorce may not be the most useful inquiry—you'll be getting an answer that reflects that person's subjective values instead of something about you that gets you closer to a divorce agreement. And, their view could well be out of alignment with what you want out of life.

With such a vast range of views, the question of what may or may not seem to be “fair” is probably not a very productive inquiry.A more useful inquiry might be to explore for yourself what will be important for you to get from your divorce as you look towards the next chapter in your life. Only you can know your own goals, and only you can set your own objectives that are consistent with those goals. While others (such as divorce lawyers, consultants, etc.) can certainly provide you with very useful information and help you reality-check choices, only you can set your objectives in life.

Another more useful inquiry might be what would be an acceptable outcome both to you and to your soon-to-be ex-spouse. If your goal is to reach a divorce settlement, then what may be mutually acceptable is a key question; however, that question must be coupled with the question about how you and your spouse can make the best use of available resources so you can set sail into the future, and your individual senses of integrity.

May 5, 2013

Washington Uniform Collaborative Law Act

Last Friday marked a watershed moment for Washington alternative dispute resolution (ADR). On that day, the Uniform Collaborative Law Act (UCLA) was signed into law. By a stroke of the pen, Collaborative Law became a dispute resolution process that is sanctioned by Washington statute. The UCLA becomes effective on July 28 and will be part of Title 7, alongside mediation and arbitration.

Washington Governor Jay Inslee signs the Uniform Collaborative Law Act into law on May 3, 2013.
The UCLA promises to be a huge benefit for people seeking the benefit of Collaborative Law, currently mostly couples who are getting divorced. Among other things, the UCLA:

  • Defines Collaborative Law as requiring a Participation Agreement, in which each party is represented by a lawyer who is hired exclusively to help parties reach agreement. Lawyers are disqualified from representing parties in any disputed matter. The statutory definition helps ensure that those who choose Collaborative Law will actually get the benefits of the process.
  • Provides for testimonial privileges and confidentiality, to ensure that proceedings are properly protected.
  • If a court proceeding has been filed, mandates a stay if a notice is provided to the court.
  • Imposes various requirements on Collaborative Lawyers to ensure the appropriateness of the process for clients. 
Collaborative Law has been practiced in Washington the last decade, and has proved to be a highly effective process for parties who wish to resolve significant disputes without going to court. By eliminating the "tug of war" of court, everyone can devote 100% of their efforts working towards solutions. Although most lawyers who focus on Collaborative Law work in the arena of divorce, the UCLA applies to all civil disputes.


April 17, 2013

Equality in Divorce

As a divorce lawyer, I often see clients who believe that divorce means dividing everything "down the middle" (50-50). Or, splitting the community property down the middle. (Washington is a community property state, after all! Right?) They typically wonder what could possibly be more appropriate than being treated exactly equally?

Initially, I want to address two common misconceptions. First, contrary to popular belief, Washington divorce law does not require or even suggest splitting property down the middle. Second, Washington divorce law also does not restrict what can be divided in divorce to community property only. Washington divorce law says that all property must be addressed (including separate property) and that all property can be divided on divorce. Yes, in divorce separate property can be divided, and commonly is divided in Washington. And, property should be divided in a "just and equitable" manner considering all circumstances.

As a Collaborative Divorce lawyer and mediator, the standard used by in Washington State by the court for dividing property is useful because it can be applied in reaching agreements. All that matters in reaching an agreement is what is truly agreeable to everyone after considering what might impact the decision. Instead of asking a judge to use his or her discretion in determining what might be "just and equitable," in reaching an agreement in Collaborative Divorce or mediation, we can ask each party to independently apply that discretion for himself or herself based on his/her own considerations.
 
For some, dividing property and debt equally may in fact just fine. However, doing so typically assumes either that both spouses are equally situated and have equal opportunities in life, or that there should be some limit in terms of responsibilities for the other. The reality is that many spouses do not leave marriages the way they entered; both spouses make choices based on expectations of the future. Such choices might relate to matters such as careers, child rearing, lifestyle, and allocation of responsibilities during marriage. Those, and other considerations including cash flow and future expenses, might factor into deciding how best to divide property in divorce.

Ultimately, a divorce is different from other types of transactions. Unlike market-place transactions, the choices made during divorce have an impact on important future relationships and on others--with each other, with children, with in-laws, with mutual friends, with future partners. The decisions can even have an impact on one's own future emotional well-being. The more integrity that all can bring to the process, and the more carefully the decisions are thought out, the better all are likely to be.

The Collaborative Divorce process is particularly well-suited to helping work through matters with a high degree of integrity. For more information about Collaborative Divorce, see here: Collaborative Divorce Information


September 9, 2012

The Broken Language of Divorce

How does the language concerning divorce -- statements like an "intact marriage" or a "broken home" -- affect our thinking? Most writers or editors can discuss how a specific word or metaphor can bring a concept to life. In psychology, narrative theories posit that our perceived realities come from our own and cultural stories. Certainly the language describing married families as "normal" or "intact" and divorced families as "broken" creates only stereotypes -- it implies that marriage is good and divorce is bad, regardless of how both conclusions can fly in the face of reality. Vancouver psychologist Susan Gamache, PhD, in her recent article A New Metaphor for Separation, Divorce, and Remarriage in The World of Collaborative Practice, discusses the effects of the dysfunctional language used to describe divorce in our society and proposes a better alternative.

Certainly, a discussion about many shortcomings of our dominant narratives describing divorce, including its 1950s-era cultural biases and inaccuracies, is hardly new to the world of Collaborative Divorce. For example, as long as a decade ago, Pauline Tesler included these concepts in some of her talks, and described  their negative effects on our society. Where Gamache's article shines is in its crispness and approachability, particularly for those for whom these concepts might be new. With the precision of a laser scalpel, she quickly ablates the "metaphors" that describe divorce, noting the significant omissions and deviations in the dominant narrative from reality. She describes its shortcomings with a quick historical review of marriage and scientific studies.

After dispatching the dysfunctional dominant metaphors that describe divorce, Gamache proposes the "health and wellness metaphor," with which she intends to better describe the spectrum of realities of marriage and divorce relationships. If our language and stories shape our perceived reality, then we need a good substitute to replace our prior narrative to help change our thinking. Gamache's new metaphor for divorce wisely takes a positive step in that direction. Her article A New Metaphor for Separation, Divorce, and Remarriage is an important step towards forming a more complete story of divorce.