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Property Division and Divorce Mediation

Under the divorce rules in California, spouses can divide assets by assigning certain items to each spouse, by allowing one spouse to "buy out" the other's share of an asset, or by selling assets and dividing the proceeds. They can also agree to hold property together even after the divorce.

Although continuing to own property together isn't a desirable option for most people, since it requires a continued financial relationship, some couples agree to keep a family home until children are out of school. Others may keep investment property, hoping that it will increase in value.

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The couple must also assign all debts accrued during the marriage, including mortgages, car loans, and credit card debts, to one of the spouses. Couples dividing debts should be aware that their separation agreement or divorce order is not binding on creditors, who may continue trying to collect a community debt from either spouse.

If the court assigns a debt to one spouse, the other can ask the court to put a lien on that spouse's separate property as security for payment of the debt. However, it's a better practice to try to pay off all the marital debts when the judge finalizes the divorce—if you're selling the family home or one spouse is buying the other out, there's often a refinancing of the house loan that provides an opportunity to do this.

We understand the ins and outs of property divsion when couples separate. If not done correctly and in a peaceful manner can become a very hot mess that can lead to courts. Once in the courts not only will the fees go above with the need of a lawyer, you'll also be at the discretion of the judge.

The Legal Framework for Property Division

Before diving into the specifics of how mediation handles property, it's important to understand the legal backdrop. States in the U.S. generally follow one of two approaches to dividing marital property:

Equitable Distribution

In most states, property is divided based on what is considered fair—not necessarily equal. The court takes into account factors such as the length of the marriage, contributions to the marriage (financial and non-financial), and the needs of each party.

Community Property

In community property states like California, Texas, and Arizona, all assets and debts acquired during the marriage are typically split 50/50, regardless of who earned or spent the money.

While these frameworks guide legal decisions, couples in mediation can often work outside the rigid formulas of the court system to create customized solutions that work best for both parties.

What Is Considered Marital Property?

Understanding what qualifies as marital property is key to fair division. Generally, marital property includes:

Income earned by either spouse during the marriage

Real estate purchased during the marriage

Retirement accounts and pensions accrued during the marriage

Investment portfolios

Vehicles, furniture, and other personal property

Businesses or professional practices created or grown during the marriage

Debts incurred jointly

Separate property, on the other hand, may include:

Assets owned by one spouse before the marriage

Gifts and inheritances given specifically to one spouse

Personal injury awards to one spouse (in some cases)

In mediation, both parties will need to fully disclose all their assets and liabilities so they can begin negotiating how everything should be split.

The Benefits of Mediation for Property Division

Flexibility and Creativity

One of the biggest advantages of mediation is the freedom to craft solutions that are tailored to the couple’s unique circumstances. For instance, one spouse may want to keep the family home in exchange for giving up a larger share of retirement assets. Mediation allows these kinds of win-win trades.

Reduced Legal Costs

Litigation can be prohibitively expensive, with lawyer fees, court costs, and delays driving up the price tag. Mediation is typically far more affordable and streamlined.

Less Conflict

Mediation encourages respectful dialogue and mutual understanding. Instead of escalating tension, the process helps reduce animosity—which is especially important when children are involved.

Confidentiality

Court proceedings are public record. Mediation, on the other hand, is private. This can be a major benefit for couples who value discretion and don’t want their financial information in the public domain.

Faster Resolution

Divorce litigation can drag on for months or even years. Mediation sessions are typically scheduled at the couple’s convenience and can lead to a final agreement much faster.

Step-by-Step: How Property Division Works in Mediation

Step 1: Full Financial Disclosure

Each spouse provides a complete list of assets, debts, income, and expenses. This includes bank statements, tax returns, mortgage details, investment accounts, and more.

Step 2: Identify Marital vs. Separate Property

Together with the mediator, the couple classifies which assets are considered marital property and which may be retained individually.

Step 3: Valuation of Assets

Some assets may need to be appraised or professionally valued—such as homes, businesses, or collectibles. The mediator may suggest neutral appraisers to ensure fair estimates.

Step 4: Discuss Goals and Needs

Each party shares what’s most important to them. For example, one spouse might prioritize keeping a family-owned business, while the other might prefer long-term financial security.

Step 5: Negotiate a Fair Division

The couple works collaboratively to divide the assets and debts. This often involves compromise and creative problem-solving to ensure both parties feel the outcome is equitable.

Step 6: Formalize the Agreement

Once a property division agreement is reached, it is written into a formal settlement document that can be reviewed by each party’s attorney (if they have one) and submitted to the court for approval.

Special Considerations in Property Mediation

Retirement Accounts and Pensions

Dividing retirement accounts can be complex and may require a Qualified Domestic Relations Order (QDRO). Mediation allows couples to explore tax implications and ensure long-term financial needs are addressed.

Real Estate and the Family Home

The family home is often the most emotionally charged asset. Mediation can help couples explore options such as co-ownership for a set time, buyouts, or selling the home and splitting the proceeds.

Business Ownership

If one or both spouses own a business, careful planning is required. Mediation allows for tailored solutions that minimize business disruption while ensuring fair compensation for both parties.

Debt Division

Just as assets are divided, debts must also be fairly allocated. Mediation can help identify whether debts are joint or separate and determine the most practical and fair way to manage them going forward.

Divorce Mediation FAQs

How does divorce mediation differ from traditional divorce proceedings?

There are several ways that divorce mediation is different from a traditional divorce. To start, mediation involves a neutral 3rd party mediator that facilitates the communication and negotiation between the divorcing couple with the goal of reaching a mutually acceptable agreement. In comparison, traditional divorce proceedings usually involve each individual retaining their own lawyer and engaging in an adversarial legal process. Mediation is less formal and more flexible than court proceedings that come with a traditional divorce process.

Who can benefit from divorce mediation?

Divorce mediation benefits a variety of individuals seeking a peaceful way to resolve their marital disputes. Couples who are willing to communicate to find mutually agreeable solutions can benefit greatly from mediation. Mediation provides a non-adversarial alternative to litigation and gives spouses control over the outcome of their divorce. It can also benefit parents who prioritize the well-being of their children as it promotes effective co-parenting and minimizes the emotional impact on the family. It also benefits individuals who value privacy and a faster resolution to divorce proceedings.

How long does the divorce mediation process typically take?

How long the divorce mediation process takes is challenging to provide an exact timeframe since each case is unique. The process generally takes anywhere from a few weeks to several months depending on the complexity of the issues and the couple’s ability to communicate effectively.

What issues can be addressed in divorce mediation?

Issues that can be addressed in divorce mediation include the division of assets and debts, child custody, visitation agreements, spousal support, property division, and more. A trained mediator will be able to handle any issues that need to be worked out during divorce proceedings.

Do both parties need to be present for divorce mediation?

In divorce mediation, the presence of both parties is preferred and encouraged because it allows for direct communication and negotiation between the couple seeking a divorce. The goal of mediation is to promote open dialogue and collaboration in resolving issues related to the separation which is why it’s recommended that both are present. There are alternative solutions if one spouse or the other can’t physically make it including phone conferences and video conference calls.

Is divorce mediation suitable for high-conflict cases?

Mediation is generally effective for couples seeking a peaceful and cooperative resolution, while high-conflict cases often involve deep-seated animosity, power imbalances, and an inability to communicate in a constructive manner. In these situations, adversarial dynamics can hinder the mediation process and make it a challenge to reach a mutually agreeable outcome.

Will the mediator provide legal advice during the process?

No, a mediator does not provide legal advice during the mediation process. Mediators work to help parties reach mutually agreeable solutions and promote effective communication, but do not offer specific legal guidance or advocate for any individual’s interests. If an individual is seeking independent legal advice, it’s recommended to seek an attorney so they fully understand their rights and obligations under the legal framework.

Can divorce mediation help with co-parenting arrangements?

Yes, divorce mediation can help with co-parenting arrangements. Mediation is a collaborative process that allows divorcing parents to work together and make decisions regarding their children’s well-being. A trained mediator will help parents develop a co-parenting plan that addresses various aspects including custody schedules, decision-making authority, communication methods, and dispute resolution solutions.

How does divorce mediation handle complex financial matters?

When it comes to financial matters, divorce mediation uses a systematic approach to provide fair and equitable outcomes. The mediator will facilitate discussions and guide couples through a comprehensive analysis of their financial situation including the gathering of financial documents such as bank statements, tax returns, and property valuations. The mediator will then assist in identifying and valuing marital assets and liabilities (businesses, investments, pensions, debts). This will help the couple explore options and alternatives while considering factors like division of property, spousal support, child support, and tax implications.

Are there any situations where divorce mediation may not be appropriate?

There are situations where divorce mediation may not be appropriate, one such circumstance is when there is a significant power imbalance between the spouses such as domestic violence or abuse. Additionally, if one party is unwilling to negotiate in good fair or has a history of dishonesty, mediation may not be a suitable option. One last situation is if there are complex financial matters or contentious child custody disputes, it may require the expertise of an attorney or court intervention.

About A Fair Way Mediation

A Fair Way Mediation has helped couples to mediate a successful and positive divorce for over 30 years. Our experience includes success with domestic partnerships, traditional, military, same sex, and alternative relationships. Our mediators are skilled in all the technologies of virtual mediation and will guide you through the process. Mediation also works non-criminal disputes such as landlord tenant, family, and HOA issues. We mediate issues throughout Palm Springs, Riverside County and San Diego.

We offer a free consultation, fill out our "Start Evaluation" form or give us a call to discuss your needs!

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