If you are thinking about divorce and you have children, you are probably seeking answers to questions that involve custody, child support, spousal support, parenting time, and settlement. We have helped over 1,000 couples through a peaceful divorce, and these are always the first questions they ask.
What is custody? Custody is the most frequently asked question. Many parents confuse custody with parenting time. Custody is all about decision making. In the states of Oregon, Washington, Colorado, and Arizona (as well as most states), those decisions center around religious training (if any), education, and medical. Let’s look at each one:
Religious Training. The decisions usually surround if a child will attend catechism or membership instruction in a certain faith, attend Sunday School, children’s or youth program, or other form of religious training with any faith. Within this area includes any form of worship attendance. Parents may disagree about any form of training, or the various types of training within a faith community.
Education. The decisions around education include which school a child may attend, or if private education or home schooling is a choice. If parents do not live near to one another, the choice of school could mean significant driving for the parent not close to the school. Sometimes the location of the school becomes an issue. In most cases, the quality of the school is the major issue between parents. If parents have the available funds, private school is often a consideration. Home schooling can be difficult in a divorce situation as both parents typically need to work full-time.
Medical. The decisions around medical include the choice of physicians, medication, therapy, and elective medical procedures. Depending upon the medical needs of a child, diet can become very important (such as with diabetes). If there is a medical emergency, there is no decision other than taking the child to the hospital ER. Once at the hospital, there very well could be some important medical decisions for parents to consider.
Extracurricular Activities. The decisions about sports, music, dancing, and other extracurricular activities are important for children. Although not rising to the same importance as those above, to both children and parents these are important lifestyle decisions.
What are custody options? There are only two options – sole/full or joint custody. More than 95% of our clients in mediation select joint custody. Our clients typically have a great deal of agreement on the topics within custody. And, if they come to place of hard impasse, they schedule an appointment with us. We can often resolve the matter in one session. Mediation allows for some variation within custody, such a joint decision-making on most areas, but sole custody on one area. In the state of Washington, a client can select joint or sole custody on each area.
If parents struggle in all areas of decision-making, sole custody may be a consideration. Sometimes a parent could be temporarily struggling with an addiction or mental health. A plan can be created to move to more joint decision-making when progress is demonstrated. Custody does not involve parenting time. If a parent has sole custody, that parent cannot independently change parenting time for the other parent.
Custody battles. Some attorneys will strongly recommend sole custody. This decision instantly positions parents for a custody battle, often costing upwards of $25,000 each. A parent must prove to the court the other parent is not capable or unwilling to work toward an important and necessary decision related to the children. This is why custody battles can be so destructive to the future co-parenting relationship. Often, there is little relationship left between parents to navigate. There are situations which warrant such a decision. We have found through mediation the need for sole custody is rare. We have negotiated modified sole custody with a few parents. In this case, the parent with sole custody must consult with the other parent before making the decision. In a few cases, we have written into the agreement that after the first attempt to resolve the matter between parents, the next step is one session of mediation. If the matter is still unresolved, then the parent with sole custody makes the decision. We recommend you carefully evaluate if sole custody is needed. We can often de-escalate emotions in mediation and help parents find common ground for the good of the kids.
What is child support? Child support is payment from one parent to another for food, shelter, and clothing of the children. All states in the US have some form of child support calculator or worksheet. The support calculator becomes an objective tool to arrive at child support. All states use a formula based on income between the two parents. The income formula may or may not include any deductions, such as taxes. Some states factor in the amount of time the children spend with each parent – Oregon is an example of this. Included in the calculators is the cost of health insurance and childcare. Child support calculators have a rebuttal section for special exceptions. In mediation, we ask parents, “How do you want your children to live?”, and create a budget for the children, which includes ALL their expenses. Then, we help them decide how to fund the budget.
What about other child related expenses? Child support is not factored into extracurricular activities of the children. Parents decide upon some formula and process for covering these expenses. We often recommend building a budget and creating a separate bank account for the expenses. Parents can split the costs (common if income is similar) or base the contributions for the expenses by percentage of income. Usually, both parents have debit cards to shop for the children and have visibility into the joint bank account. Often, one parents makes most of the purchases and the other parent can see the expenses in the bank account, as well as communication from the parent making the purchases.
What happens when a child turns 18? In most cases, child support ceases. If the child is still in high school, support usually continues until graduation. If the child has special needs, the support might continue depending upon the decision of the parents, or, if necessary, the courts. A child in Oregon has the right to support until 21 if they are enrolled in post-high school education full-time, single, and passing all classes. Most parents agree and plan for college or tradeschool for their children.
Spousal support varies greatly from state to state. Only a few states use a spousal support calculator. For most states, some of the factors that decide spousal support are length of marriage, difference of income between parties, ability to produce income, age, assets, and any disabilities. We have found creating budgets is one of the most helpful exercises to help determine support. The goal of support is similar, not exact lifestyles. In very few cases do parties end up with the same income. However, between spousal and child support, incomes for both parties can approach a level of equity.
Types of support. In Oregon, there is three types of support: maintenance, transitional, and compensatory. Maintenance is the primary form of support to help equalize the income between parties. Transitional support assists one party to gain further education to produce a larger income. A party needs to have a vocational or educational plan, including acceptance into a college or trade school. Compensatory is very rare, and awarded if one party assisted the other party in greatly increasing the other partner’s income.
In other states, most support is maintenance in nature. Again, many factors come into play. We highly encourage you to seek legal counsel from an attorney to determine any potential support. Spousal support needs to answer two questions: how much and for how long?
What is parenting time? Simply stated, parenting time is how much time the children spend with each parent. Parents need to work out a weekly or bi-weekly schedule, focusing on as much consistency as possible. Some jobs make a regular weekly schedule very challenging – law enforcement, fire protection, and medical, to mention a few. In mediation, we work through these challenges, seeking as much consistency as possible for both parents and kids. After parents settle on a weekly schedule, then we work on a summer and holiday schedule.
What is a parenting plan? A parenting plan includes parenting time, as mentioned above, plus much more. A parenting plan will include custody, rights for each parent for information, parental communication, exchanges of children, decisions around technology, firearms, and first right of refusal. If you have children, a parenting plan and child support worksheet are needed when submitting your documents to the court. As mediators, we help parents come to agreement on all the decisions incorporated into a Parenting Plan.
How do we divide personal property? We create a simple spreadsheet, with a column for each partner. Parties decide on who gets what vehicles and their values by subtracting the Kelley Blue Book value, minus any auto loan. Then, the parties to divide up all the “stuff” – camping, outdoor furniture, grill, bikes, sporting equipment, tools, collections, small kitchen appliances, dishes, etc. Some clients put values to larger items to try and create equity, others just spit ball them.
How do we divide the real property? We have an entire blog dedicated to how to settle the hosue coming soon. Briefly, both parties need to agree if the house will be sold, or if one party buys out the other. If parties sell the home, they agree on what improvements/maintenance will be necessary to put the home on the market. Parties should secure a trusted and excellent realtor to guide them on decisions of home repairs in preparation of sale and how to market the home with the initial asking price. Parties should agree on how to split the proceeds before the home is put on the market. If one party is buying out the other, they need to agree on the value of the home. Typically, the home will need refinanced to remove the other party from the loan and title. Most lenders will want an appraisal in the loan process. Parties can use the appraisal as an objective valuation for the home. Simply subtract the current mortgage from the appraisal value to obtain the net equity. Most parties equally split the net equity. This is the amount owed to the party leaving the home. There is a method to split the equity while retaining the current mortgage for the party remaining in the home. The method is a bit complicated, and I will address it in another blog.
How do we divide retirement? Parties combine their retirement accounts and divide equally. If one or both parties have a pension, you can either seek to value the pension, or split them for the duration of the marriage. If a party had a retirement account before the marriage, then the premarital balance should be subtracted from the current balance. If parties need to transfer funds in retirement accounts, a Qualified Domestic Relations Order (QDRO) will be necessary drafted by an attorney with expertise in that field. Retirement accounts are pre-tax investments. Sometimes dividing retirement accounts can become complicated, and the assistance of a professional can be very helpful.
How do we divide banking and investments? Most investments are usually simple to divide equally. Parties often use their financial advisors to assist them. We like parties to divide whatever is possible without a court order before the court documents are submitted. This alleviates the need to transfer money post-divorce. Some accounts will need the signed copy of the general judgment, so parties do not incur tax consequences. Parties can use any banking or investments to “true up” or equalize assets and liabilities.
How do we divide our debt? We highly encourage parties to pay off debt from the sale of a home or from investments. If that is not possible, then we brainstorm ways to divide the debt. Cash flow and credit scores determine the ability to secure a loan or credit card to transfer 50% of the debt. Negotiating the debt can become a challenging point in the divorce process. Seeking assistance from professionals is recommended.
What if we have IRS and state tax debt? Tax debt is one of the most difficult areas to resolve. Again, if there is any possible way to pay off the tax debt, along with any consumer debt, this would be the first option. If this option is not possible, and the parties have not yet contacted the IRS to set up a payment plan, then contacting the IRS and setting up a payment plan would be recommended.
What about child tax credits? Parents often split children or rotate years for the Child Tax Credit. In other words, if parents have two children, then one parent takes a child, and the other parent takes a child. If parents have one or an odd number of children, then parents rotate years of claiming the children. In mediation, sometimes parents will agree for one parent to claim all or more than 50% of the children.
If you need more information, you can attend our next Divorce Options Workshop, where we go into all of this and more in greater detail. You can also contact us for a free 15-minute phone consultation.