Equitable but not Equivalent

Regardless of planning or the very best of intentions, nearly half of marriages fail.  As a mediator, an important goal is to help people understand one simple reality; unless previously noted in a signed and executed prenuptial agreement, all assets and property are part of the marital estate.  Rationally this is pretty straightforward but emotionally people will dig in their heels believing that they brought more to the marriage and should therefore get more back out when the marriage ends.  Adopting this position can be a significant obstacle to success in mediation and rarely if ever gains any traction in the courts.  But this has not stopped people from marching to court believing they have the best attorney since Ally McBeal only to hear from a judge that the marital estate is to be divided equitably.  To that likely outcome, factor in an overburdened and backlogged court system and attorney’s fees and many people walk away with a boilerplate settlement that took too long and cost too much.

A lot of potential clients understand that a litigated divorce will be more expensive and more time consuming.  Many of those also recognize that it will be more stressful.  There are highly cited studies showing that litigated divorces lead to worse parenting outcomes.  Despite all of this the one thing that a majority of people fail to recognize is that the lose control of the outcome the moment the decision is made to fight this out in court.  By contrast mediation gives you the opportunity to develop a settlement that may meet some of each party’s priorities.  The best example is a marital home.  Both parties may have a shared goal of keeping the home for the sake of children.  Separately one party may have an individual goal of keeping the home and the other is less committed to it but wants a bigger share of the financial resources.  In these cases, settlements that are equitable but not equivalent can be crafted by a skilled mediator or by attorneys representing each party.  Once the settlement is reached it can be drafted into a decree and presented to the courts (very often without an appearance by the parties).  Assuming that the equitable but not equivalent standard has been met courts are likely to approve.  

Equitable but not equivalent?  All settlements should be equitable in that the dollar values of assets, property and debt should be very close to even.  That said they need not be equivalent.  It is very common that mediated settlements may come away with a more customized distribution.  For example one party may accept a settlement that is more heavily weighted in liquid assets while the other accepts property.  Courts may consider these settlements if parties arrive at the hearing with an agreement in principle and mediation may be the best way to achieve that as well.

The key thing to remember is that in the absence of an pre-negotiated agreement, the courts will default to a boilerplate division of the marital estate that will not address shared or individual goals.  It is not that they are mean, uncaring or punitive…..they are none of the above.  The court system simply lacks the time and resources to oversee negotiations and craft customized settlements.