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Divorce = $100,000


Divorce = $100,000


Love is Grand, but When It's Gone, Divorce Can Cost More Than Twenty Grand


By DIVORCE360.COM STAFF

COST OF MEDIATION

An alternative to traditional litigation, mediation involves al third party hired by the couple to help dissolve their marriage. The mediator’s goal is to resolve the same issues that an attorney would handle, such as child custody, support and visitation, property and asset division and spousal support. 

 
“With divorce mediation you get nuetral help, which is less likely to be adversarial,” said Katherine Stoner, an attorney based in Pacific Grove, Calif., and author of “Divorce Without Court: A Guide to Mediation and Collaborative Divorce.” Many mediators are also attorneys; others have counseling backgrounds. A mediator with legal training can help draft the actual divorce agreement. Ones with counseling experience are helpful in resolving emotional issues such as child custody, but cannot draft legal documents.   


Mediators look at issues from a “holistic” view and consider psychological, emotional, and social issues, not just legal ones, explained Elinor Robin, a psychologist who co-runs A Friendly Divorce in Boca Raton, Fla,, with her husband, David Spofford, an attorney. Both parties share the mediation fees, usually equally. And since the parties have fewer issues to resolve, the process usually isn't as time consuming. Most mediators require formal sessions over several weeks or months to ensure that both parties are satisfied.  

The other option is collaborative divorce, a hybrid of litigation and mediation. This process demands that the couple and their attorneys be committed to reaching a settlement outside the courtroom. If a satisfactory resolution cannot be achieved, the collaboration lawyers are dismissed and the couple must find other legal representation.  

The American Bar Association (ABA) has no official position on divorce mediation, but Gregg Herman, the chair of the Family Law committee said that the ABA considers mediation a “conducive way to resolve family disputes and reach settlement, especially in cases involving children." However, Herman advises that, even with mediation, people should consult an attorney. And divorcing couples with complications like business valuation or complex custody issues should choose mediators who are attorneys. 

Mediation and arbitration are helpful in the current economy, said California attorney Heicklen, who along with his wife, Clare, a marriage and family therapist, charge $250 per side per hour for a 10-hour minimum mediation session that costs $5,000 instead of the $90,000 per side that he says it would cost a couple for a contested divorce in his state. 

Philip Mulford, who owns Mulford Mediation, said legal costs in Northern Virginia, where his office is located, are less than in California, an estimated $25,000 to $50,000 per spouse, which is why he touts mediation as the better financial option. "My mediation clients invariably tell me stories of couples they know who have spent well in excess of $100,000," he said.

Heicklen acknowledged most couples often take 20 hours of mediation to reach a settlement, at a cost of about $10,000. Still, whether a couple spends $5,000 to $10,000 in mediation, they’re still saving between $80,000 to $85,000 in legal fees, Heicklen said. That money can, instead, be part of the settlement agreement, letting the couple walk away in better financial shape than if they had battled in a courtroom.


HOME COSTS AFTER MARKET DROP 

When a couple divorces, a big question is what to do with the marital home. "Rarely does one of the parties move away while the kids are growing up...The separation is just too hard on the family,” she said.

One of the biggest financial issues today is the drop in the real estate market, Wall said. In San Diego, Calif., for example, “The house value is all over the map, but usually in the $600,000 to $750,000 range,” she said. A house worth $900,000 two years ago is not sellable today. “There is very little equity in the home, after sales costs, even if it can be sold," she said. 

Divorcing couples with home equity can afford to put their home on the market, but usually don't want to do so, Wall said. “Most people hate to sell at the low prices they could get, so this is distasteful. As for costs of sale, I don’t see many people doing ‘For Sale By Owner’ in this tough market," she said. The only positive in this scenario: "I do see real estate agents discounting their fees to 4.5 percent or 5 percent rather than the customary 6 percent,“ she said.

Some couples agree to have one spouse refinance the mortgage, which can get expensive depending on the state. The national refinancing costs average is between $2,000 and $3,000, which includes taxes, insurance and interest. But in some states, like Florida, the cost is several thousand dollars higher.

Jackie Transue at Viridian Services often works with divorcing couples on refinancing mortgages. The cost, she said, can include a mortgage tax as well as costs for re-issuing a title policy versus new title, for an appraisal, attorney fees, escrow and recording fees. “As a general rule of thumb, I tell clients that usually between three and four percent of the loan amount that will be financed. If we can obtain the prior title policy, get a CEMA to eliminate the mortgage tax and finance some of the closing costs, the client can walk away from the closing table with up to 2 percent of the loan amount or $2,000 whichever is lower and still be considered a rate and term refinance which will give them a better rate and terms than a cash out refinance.”

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