For a litigation attorney, transitioning into collaborative law is like an artist being handed a paintbrush for the first time. Logically art and the law seem at odds. However, the similarity revolves around creativity. The collaborative process gives a lawyer the ability to be creative and think outside the box, which litigation dampers. I believe this creativity leads to a better work product and allows for long term planning, not just the resolution of the immediate divorce. There are many options for divorcing couples which I believe are often overlooked in the court system. The collaborative process is designed to address things often overlooked in divorce agreements that are often not managed by traditional litigation, including:
1. Asset Distribution: Securitize, securitize, securitize
An obligation without security is often worthless, especially when payments over time are involved. If a party paying alimony dies, no further alimony is payable. By law, it terminates upon death of the payor. Securitizing asset distribution is important as well. Imagine these scenarios:
- Wife is awarded a lesser percentage of the marital estate and awarded alimony for ten (10) years at $2,000 a month. Husband dies after 3 months into the term of alimony. Wife has forgone a greater percentage of the marital estate for alimony that she will never receive.
- Party retains a business and is required to pay installment payments to other spouse. Payor/business owner spouse fails to pay and disappears. Payee has no means of receiving payment unless he/she files for contempt and there are assets (still in existence) to attach.
In the collaborative process you can explore a multitude of security options such as life insurance, beneficiary designations, liens, judgments and mortgages. Funds therefore are automatically paid to the spouse who was entitled to receive it without litigation.
2. Estate Planning for Divorced Persons
Estates are not addressed by courts, but parties often want certain protections for their children. Agreements can provide for estate provisions to protect children and estate lawyers can be used as part of the collaborative process to discuss all options. Collaborative lawyers will review current beneficiary designations under the divorcing spouses’ wills, insurance policies, and other accounts.
Divorce is a “life changing event” under certain plans which means that a former spouse may be automatically be revoked. Therefore, it must be determined if existing designations can continue. The language in the collaborative marital settlement agreement can commit the account or policy owner or testator to designate or maintain a designation for the soon-to-be former spouse’s benefit or that of the children, as well as provide for notice so that any breach is addressed immediately. Trusts can also be set up to address how the funds are maintained and controlled for the benefit of minor children.
3. Dividing Retirement Plan Assets in a Divorce
Distribution of retirement plans commonly needs more detailed attention. I often see Agreements which simply state “the marital portion of Husband’s pension shall be distribute equally between the parties by way of QDRO”. Particular attention must be paid to different types of retirement accounts, especially pensions. The agreement must contain language to protect a payee spouse in the event that the pension holder predeceases that spouse.
In some cases, a payee spouse’s benefits can be adjusted to his or her life expectancy which provides survivor benefits so that the benefit to the surviving spouse is not diminished by the death of the participant spouse. The adjustment can be applied only to the payee’s benefits so it has no effect on the participant’s benefits under the pension. Each type of retirement plan is different and specific attention must be paid to the plan terms to determine exactly what language is needed and how it can be tailored to effectuate the intent of the parties.
About Robyn Musi, Esquire
Robyn Musi, Esquire has been a family law attorney at the firm of Raffaele Puppio in Media, Pennsylvania for over twelve (12) years and was a founding partner of Civil Solutions: The Family Law Alternative Dispute Resolution at Raffaele Puppio which provides mediation, arbitration and collaborative law services. Learn more about Robyn Musi, Esquire.