What's the difference between mediation and arbitration?

A mediator helps the two of you identify the issues that need to be resolved and then helps you make your decisions.  A mediator might offer creative alternatives to help you decide, but he or she does not make any decisions for you.

An arbitrator, on the other hand, does make decisions for you.  Each of you would discuss your issues, and then the arbitrator would present what he or she feels is the best solution.  Usually, the parties agree ahead of time that they will be bound to the decisions of the arbitrator.

What's the difference between mediation and collaborative law?

In collaborative law, the two of you meet along with your attorneys - all four of you together. The goal of the attorneys is to work together to help you get through your decisions more efficiently. It's for couples who feel they need legal representation throughout the negotiation process but want to avoid litigation.

You and your attorneys would agree in advance not to litigate. If either party ignores the agreement and goes to court, both attorneys would be required to resign from the case, and you would need to hire different attorneys.

Collaborative law is not mediation. It does not involve a neutral party (a mediator). It's primary focus is based on matrimonial law. In mediation, while the mediator should make you aware of law, the primary focus is on what the two of you feel is fair and would work best.

How do I choose a mediator?

1. You have to feel comfortable with your mediator. Do you sense that he/she conveys the proper principles to you?
2. Experience is vital. Ask how many years he/she has been mediating.
3. If you believe that your case involves an unusual circumstance, mention it and see if you feel comfortable with the response. Don't expect solutions to be offered during the interview, but listen for the approach that the mediator would take.
4. Make sure the mediator who you are interviewing is the mediator who will be handling your case.

For Art Lieberman's qualifications, click here, then give him a call at
(919) 848-9282. Or, if you would like to ask a specific question via the Internet, click here.

Are there different styles of mediation?

Most approaches to mediation can be grouped into three styles: Facilitative, Evaluative, Transformative. When I am mediating a divorce, I use a Facilitative approach. When I am mediating a commercial or civil complaint, I tend towards the Evaluative approach.

Facilitative: The mediator is helping the two parties make their decisions based on their individual definitions of fairness. The mediator helps the parties find common ground, proposes alternative approaches to resolving the issues, explains advantages and disadantages of various options. He/she will provide information but does not give advice, recommendations, or opinions. Basically, the mediator is helping the parties figure out what is fair but keeping in mind that each party has to make his/her own decisions and be solely responsibile for them.

Evaluative: The mediator plays a stronger role, making recommendations and giving opinions, stressing the pluses and minuses of proposals, pushing the parties to a decision.

Transformative: This approach tries to change/improve the relationship between the parties, concentrating on how they communicate and interact. When each party has a strong understanding of the other party's issues and points of view, then they can come to agreements much easier.

You will see bits of each of the three styles in every mediation, but the mediation will tend towards one of the styles. And, as you might expect, the mediator's own personality has a major effect on the process.

In what kind of cases will mediation NOT work?

• If one of you is unwilling to present all asset documentation, or is hiding any assets.
• If one of you has a goal of financially harming the other person.
• If one of you is unable to state what you need and negotiate while your spouse is sitting next to you. Sometimes, physically or emotionally abused people are best supported with an attorney.
• If one of you simply cannot make decisions or is unwilling to take responsibility for your decisions.

In fact, mediation is quite effective in situations where you might think otherwise. For example, if there is a lot of unrestrained anger, mediation is a much better alternative to using attorneys to litigate. Litigation tends to increase the anger, the threats, the attacks, while mediation tends to suppress them.

If a couple is already in a heated battle through their attorneys, totally switching over to mediation - midstream - is very effective in putting a halt to the aggression and helping the couple work together to resolve the issues more peacefully and more quickly.

The negotiation skills of each of you do not have to be equal. It is the mediator's responsibility to balance the negotiating and to protect each of you from being overpowered by the other.

How many mediation sessions will it take? What's the cost?

The pace is set by you.  I do not have a preset number of sessions.  It depends upon (1) the complexity of your situation, (2) how prepared each of you is for making decisions, (3) how well you communicate with one another.

For example, certainly there are more decisions to be made if you own a home rather than rent one.  If you don't have young children, only half the amount of time is needed. There are many decisions to be made concerning your children.  Almost all of the decisions are easy to make, but there are lots of them, and they take time.

Each session lasts 1½ to 2 hours and we usually meet once per week. But, again, you set the pace.  If either of you is feeling that you need to stop after one hour, that is fine.  And, if we are on a topic and progressing well, you might want to continue longer to finish it uninterrupted.

Most of my cases that involve children use between 3 and 5 sessions. The majority of my clients who have children spend between $1500 and $4000 on divorce mediation.

Once there is an agreement, does the mediator handle the legal papers for the divorce?

The mediator prepares a very detailed document containing all of the agreements that the two of you make.  This document is called a Memorandum of Understanding, usually around 10 pages long. You would give this document to your attorney, and your attorney would review the agreements with you and, basically, convert your Memorandum of Understanding into a Separation and Property Settlement Agreement - a legally binding contract, which must be signed by the parties in front of a notary public. You also have the right to prepare the Separation and Property Settlement Agreement yourselves without the use of an attorney.  The time spent in coming to your agreements and the preparation of this document - done in mediation instead of through your attorneys - is where you are avoiding high attorney fees.

One person cannot act as both your mediator and as your attorney. If you were to choose an attorney to handle your mediation, you would have to find another attorney to file your papers.

What is a Memorandum of Understanding?

At the completion of the mediation, the mediator will prepare a document that details his/her understanding of what the two of you agreed upon.  This is called a Memorandum of Understanding.  It is not a contract, even though it might look like one.  By state law, a mediator cannot write a contract for you.  So, you would give the Memorandum of Understanding to your attorney, who would turn the Memorandum into a contract - or you can do this, yourselves, without using an attorney.

Do we have to state a reason or cause for the divorce? Wait 12 months?

There are two parts to the divorce: the Separation and Property Settlement Agreement, and the divorce decree. Generally, these are separate processes.

The Separation Agreement lays out the terms of the divorce: dividing your assets and debts, parenting arrangements, child support, spousal support - and getting the two of you into separate living abodes. This becomes a contract when signed by both of you in front of a notary public. Coming up with the terms of the separation agreement is what mediation is all about. The Separation and Property Settlement Agreement might be done before one of you moves out, or after.

[If the two of you cannot agree to separate, if necessary you can file and ask the court to declare a "legal separation" (also called "divorce from bed and board"). Your goal in mediation is to avoid this. But if necessary, a court can order a legal separation under one of the following grounds:

(1) Abandonment.
(2) Maliciously turning the other out of doors.
(3) Cruel or barbarous treatment that endangers the life of the other.
(4) Offering such indignities to the person of the other as to render his or her condition intolerable and life burdensome (mental curelty).
(5) Becoming an excessive user of alcohol or drugs so as to render the condition of the other spouse intolerable and the life of that spouse burdensome.
(6) Adultery.]

Getting the divorce decree is a separate process. After the two of you have lived apart from one another for a full year, then one of you would file for divorce. Basically, you are asking the court to declare that the marriage is terminated. Hopefully, by this time, the Separation and Property Settlement Agreement has already been completed and is in force.

One of the following two "grounds" is required for obtaining the divorce decree:

(1) Separation: living separate and apart for one year ("no fault"). You are not required to file for legal separation during this period.
(2) Incurable insanity.

Do we have to use attorneys?

The short, technical answer is No.  BUT, I strongly encourage you to use attorneys in addition to your mediator... for any legal questions that you might have, for advice from other viewpoints, and to review the terms of your agreement.  Some decisions in a divorce can be quite difficult, and it is best to have a few sources of opinion.  Getting divorced is one of your few major life actions.  You want to be sure that all of the legalities are proper.

Both of you cannot share an attorney.  An attorney is not allowed to represent both sides of a case. Also, one person cannot act as both your mediator and as your attorney. If you were to choose an attorney to handle your mediation, you would have to find another attorney to file your papers.

I ask my clients to select an attorney about halfway through the mediation process, or earlier.  Normally, you do not need an attorney when you begin mediation, but you don't want to wait until the last mediation session to select an attorney.  Your attorney is part of your support team, for answering legal questions and for confirming anything that you question.

At our first mediation session, we will discuss how to select an attorney.  Most importantly,  you must ask your attorney if he/she is supportive of mediation.

Please note:  If you suspect your spouse is hiding or disposing of assets, or if abuse is involved, you should seek the help of an attorney immediately, regardless of whether you will be using a mediator.

If we use a mediator and attorneys, won't it cost twice as much?

Using the combination of attorneys and a mediator actually should be cheaper than using attorneys alone.  If you were not mediating, the bulk of the attorney fees (probably 90%) would be from trying to resolve the issues between you and your spouse and making all of the decisions.  But, that is the part that will be accomplished in mediation.  So, you'd be paying one mediator for that part instead of your two attorneys.  And, the mediator will be less expensive because your negotiations will be much more efficient, using much less mediator time than you would have used attorney time - because the two of you are discussing the issues face-to-face.

Most of my clients spend between $1500 and $4000 on mediation.  I have surveyed attorneys, who have told me that the fee to handle a non-mediated case would cost a minimum of $5000 - for each of the attorneys.

How do I select an attorney?

Each of you will be hiring an attorney, in addition to your mediator. But your attorney's role is limited to providing legal advice, reviewing your agreement, preparing legal documents, and appearing with you at your hearing. Negotiations, though, are done with your mediator.

So, you'll have to interview attorneys to find one who you are comfortable with. You can interview attorneys in a telephone call. Some attorneys offer a free 1/2-hour consultation. Usually, you do not need to have your attorney in place before you begin mediation (unless immediate action is required in order to protect yourself physically or your assets from being drained away). You don't want to wait until the end of the process, either. I ask my clients to have their attorneys retained no later than halfway through the mediation process.

Here are some questions you can ask an attorney in a telephone interview:

1. How many divorces have you handled in the last year? [You must hire a matrimonial attorney!]
2. How do you feel about mediation? [Any negativity probably means you should call someone else.]
3. If we are using a mediator, what would your retainer fee be? [Should be between $1000 and $3000.]
4. What is your hourly rate? [Will probably be between $180 and $300.]
5. How do you charge for telephone calls? [Usually in 6, 10, or 15 minute increments.]

How is the attorney paid?

This is something that the two of you should agree on at the beginning of mediation. Are the attorneys paid out of marital assets (which is the same as saying that the costs will be shared equally)? Will one of you pay all of the fees (which would be deducted from that person's half of the marital assets)? Would the fees be shared up to some limit?

If a trial is necessary (but we hope not), one spouse may be ordered by the judgge to pay some portion of the other spouse’s legal fees. The court can award attorney fees incurred for the custody, child support, and spousal support claims but not for the divorce from bed and board, absolute divorce, or equitable distribution claims.

Do we have to appear in court?

To receive the actual divorce decree, there are a few ways this can be handled. Both of you and your attorneys can appear. Or just the person who filed for divorce would appear and receive a "default judgement." Or, your attorney can go alone and ask the judge for a "summary judgement." This third approach is the simplest. If both of you are in agreement with everything, you should discuss this option with your attorneys.

Do we have to be a resident of NC? Where do we file?

To file for a divorce, either spouse must have been a resident of the State of North Carolina for at least six months. The divorce proceedings will be in the county where either party resides. [Based on NC General Statutes, Chapter 50, Sections 50-3 and 50-8]

If we've already made our decisions, how can a mediator help us?

The mediator would review your decisions with you, for two purposes:

1. Have you thought of everything?  (For example, have you included a statement about survivorship rights in pension plans?)
2. Are there some alternatives to your decisions that you have not thought of?
3. Are your decisions equitable?  (For example, an inheritance is not a marital asset, and you have the option of sharing it.)

Because you have written up everything yourself, your mediator would not need to write a Memorandum of Understanding.  Instead, you could just edit your own document, based on the mediator's comments.

How much child support will I have to pay?

In mediation, the question is not "How much will I have to pay?"  A more appropriate question is, "How much is needed from me to help support our children?"

In mediation, I guide you through a process that helps the two of you derive an amount that both of you feel is appropriate and fair.

NC Child Support Guidelines Worksheets:  The state provides a "calculator" in the form of worksheets to help you determine an amount for child support. If the two of you leave it up to the court to decide the amount, these Child Support Guidelines Worksheets would be used. However, you can choose to derive your own numbers in place of the Guidelines numbers.

The Worksheets take a very impersonal approach that considers the "average" family.  But, your family is not average, and a more meaningful number can be arrived at by the two of you.  In mediation, we use the Worksheets only as a guideline - an approximation of what the child support amount should be.  

Click here for more information about the NC Child Support Guidelines.

How much spousal support (alimony) will I have to pay?

In NC, spousal support is not something that can be "calculated."  There is no worksheet similar to the Child Support Guidelines.

And, every divorce does not involve spousal support.  First, there has to be a need for support, and, second, there has to be a request for support.  Some people who need help just don't want any help - they want to make it on their own. Others who might not have a "need" for support might still feel they have a right to some form of support.

And, if spousal support is provided, it might not be paid forever.  There are many kinds of support.  A person might need support for only a few years, until he/she can bring his/her income level up.  A person might need support to go to college, in order to learn a new skill.  Or, a person may need support for the long term.  In mediation, the two of you can agree on any form of payment that makes sense to you.

The amount of spousal support depends upon the length of the marriage, your roles during the marriage, the income that each of you has, your style of living, your needs, and several other items.  But, there is no equation that says "If you've been married for 10 years, you get $1000, and if you've been married for 12 years, you get $1125."  Some lawyers use a "rule of thumb" to arrive at a ballpark number, but 10 lawyers and 10 judges probably would specify 20 different amounts for spousal support.

In divorce mediation, I help my clients arrive at an amount of support that each of them feel is proper.  I explain why support may be needed, and why it should feel ok to pay it.  Through open discussion, we arrive at a support figure that works.

Here is a NC state statute related to spousal support:

Are child support and spousal support tax-deductible?

Child support is not tax-deductible.  You would be supporting your child whether you were divorced or not. When filling out tax forms, the payer does not deduct it from income, and the receiver does not add it to income.

With spousal support, you have an option. The payer can take the amount as a tax deduction, in which case the receiver must report it as taxable income. ...OR... The payer can choose to not take the tax deduction, in which case the receiver does not report it as income. The two of you need to agree, in writing, on which of these alternatives will be used.

What should we bring to our first mediation session?

1. Basic information: [A form is available on this web site.]
   • Full (and maiden) names of all family members.
   • Addresses, telephone numbers, e-mail addresses.
   • Marriage date, and birthdays of all family members.
   • Social security numbers.
   • Education, occupation, employer, income, benefits.
   • A photo of your family
2. Assets & Liabilities: [A form is available on this web site.]
   • House: Approximate current market value.  An appraisal is not needed at the first meeting.
   • Mortgage: Mortgage company, account number, balance, date of balance.
   • Bank accounts: Bank name, account name, account number, balance, date of balance.
   • Investments: (details)
   • Retirement and pension plans: (details)
   • Non-term life insurance: Company, policy number, beneficiary, current cash surrender value.
   • Loans: (details).
   • Credit cards: Bank, account name, account number, balance, date of balance (for every credit card, including those with a zero balance).
3. Documentation:
   • Federal tax returnsW2's, 1099's, K1's for last 3 years.
4. Photo of your family

How do we tell the children?

There is no single, easy answer to this question. How to handle this varies from child to child. You will have to figure out the best approaches to take with each of your children.  I want to encourage you to ask your therapist or to seek out a child therapist to help you find an appropriate approach.

Articles often appear on the Internet. Try searching for "divorce tell the children"

After the divorce, can mediation still be helpful?

Disagreements can still arise after the divorce.  Regardless of whether you used mediation before the divorce, mediation can still be used later.  Perhaps one of you wants to change the amount of support being paid.  Or maybe some item was omitted from the original agreement.  The two of you are allowed to make decisions together without the use of lawyers or mediators or the court.  However, if you cannot reach an agreement peacefully, then mediation probably will be able to help you.

Trial Separation instead of divorce: Can we mediate that?

If you are choosing to separate for the purpose of taking some time to figure out if you want to be divorced, this is very different than separating only because you are required to be apart for one year before divorcing. The issues to be decided for a trial separation are very different than those for a divorce. Negotiating a trial separation is a specialty area of mine.

If you are separating for a while in order to determine if you want to get divorced, then an entirely new set of issues is involved. For this, I offer what I call a "structured separation." The separation period needs to have a process in place that is aimed at helping you determine the answer to the big question: "Do I really want a divorce?" If you simply live apart just to see what it's like, it is my observation that you will end up getting divorced. I am experienced in helping couples negotiate a plan that lays out the rules during the separation period and helps them study their relationship to see if they can make their marriage work.

Selling the house: Capital Gains

If the two of you own a house together, you will have to decide if you are going to sell it, or if one of you is going to buy the other's half share of the house.

Here's a summary of the tax effect:

• Each party has a $250,000 tax exemption from the profit.
• To take advantage of the exemption, you must have been in the principal residence for 2 out of the previous 5 years.
• You can reapply the $250,000 on the sale of another home every 2 years; if sooner, it is prorated.
• If a couple jointly own the house after divorce, and if one of them qualifies for the $250,000 because he/she has occupied the house 2 out or 5 years, then the other spouse also qualifies for the $250,000 exemption.
• If one partner buys half the house from the other during the first year after the divorce, the basis on the original half is the original basis of that half; the basis of the 2nd half is the selling price. In this case, the seller (the owner of the first half) pays no tax.

Social Security: How is it affected by divorce?

From the Social Security Administration (more information is available at www.ssa.gov):

Changing your name on your Social Security card: If you change your name, be sure to tell both Social Security and your employer. This will assure that your earnings will be properly reported by your employer and recorded in our records. You can get a new card from Social Security with your new name.

How divorce affects your future retirement benefits: If you are divorced after at least 10 years of marriage, you can collect retirement benefits on your former spouse's Social Security record if you are at least age 62 and if your former spouse is entitled to or receiving benefits. If you remarry, you generally cannot collect benefits on your former spouse's record unless your later marriage ends (whether by death, divorce, or annulment).

How divorce affects survivors benefits: If your divorced spouse dies, you can receive benefits as a widow/widower if the marriage lasted 10 years or more. Benefits paid to a surviving divorced spouse who is 60 or older will not affect the benefit rates for other survivors receiving benefits.

How remarriage affects survivors benefits: In general, you cannot receive survivors benefits if you remarry before the age of 60 unless the latter marriage ends, whether by death, divorce, or annulment. If you remarry after age 60 (50 if disabled), you can still collect benefits on your former spouse's record. When you reach age 62 or older, you may get retirement benefits on the record of your new spouse if they are higher. Your remarriage would have no effect on the benefits being paid to your children.

How retirement affects survivors benefits: If you are collecting survivors benefits, you can switch to your own retirement benefits (assuming you are eligible and your retirement rate is higher than the widow/widower's rate) as early as age 62. In many cases, you can begin receiving retirement benefits either on your own or your spouse's record at age 62 and then switch to the other benefit when you reach full retirement age, if that amount is higher.

Retirement

There are many types of retirement plans. Each has its own method for how funds are added to it, who adds the funds, when they are taxed, how they are transferred. All of them, though, have the same considerations in divorce negotiations: The portion of the retirement plan that was earned during the marriage, and all growth of the investment related to that portion, is a marital asset and is eligible for division between the parties. It doesn't matter when the funds are received - only when they are earned. For example, if someone began employment with a pension plan in the 5th year of a 20-year marriage, and retired 10 years after the divorce, the first 15 years of that pension covering 25 years of employment belong to both parties. However, figuring out the value of those 15 years is sometimes difficult.

IRA: Retirement savings invested by individuals (outside of the workplace).

401(k): Retirement savings invested by employees, usually through payroll deductions.

Defined benefit plan: This is the type of retirement fund in which the employee will receive a fixed amount of income per month after retirement. The amount received is usually dependent upon how many years of employment there were, and how much the employee was earning during the last few years. Generally, private sector funds do not require employee contributions to the fund, whereas public sector funds usually do. Usually, there are penalties in the form of reduced monthly payments if retirement occurs before a certain age and/or a certainly number of years of employment. The employee has no control (and does not need any control) over how the plan might be invested. Income from the plan is taxed when received. Determining the marital value is difficult.

Defined contribution plan: This is quite different from a defined benefit plan. With a defined contribution plan, usually both the employee and the employer make contributions to the employees fund. The employer (and the IRS) sets up rules on how much can be added by the employee and employer. The value of the plan also grows, depending on how the fund is invested. The employee's contributions to the plan are tax deductible, and are taxed when received after retirement. The following are generally considered to be types of defined contribution plans: 401(K) plans, 403(b) plans, employee stock ownership plans and profit sharing plans.

Cash balance plan: This is very similar to a defined contribution plan. Each year, the employee’s account is credited with a pay credit and an interest credit. The pay credit is a percentage of salary. The interest credit is added each year, as defined by the plan. So, the value of the plan is equal to the amount that is in the fund at any given time. The employee can take the account as a lump sum or an annuity when employment ends, if vested as per the rules of the plan. The payout does not take into account the employee's age or number of years with the company.

Tax Issues

IRS Publication 504, "Divorced or Separated Individuals," is available at http://www.irs.gov/pub/irs-pdf/p504.pdf. It covers the following:

• Filing status: joint, separate, single, head-of-household
• Exemptions for the children
• Spousal support - when is it not deductible?
• Retirement funds [IRA's are treated differently than 401(k)'s]
• Transferring assets
• Who gets to deduct the mortgage interest on the house?
• Selling the house