Equitable Does Not Mean “Equal”

During a recent mediation session Ellie was very clear that she did not believe it would be fair to divide everything equally.

“You have not been working to your full potential” she told her husband, Geoff. “You have a college degree and could have made as much money as I have but you decided to work part time and I have had to carry the weight of most of our expenses during our marriage! It just doesn’t seem fair that you should get half my pension as well as half of our savings and other assets.”

“Don’t forget,” responded Geoff, “I did work very hard early on in my career but we both decided it would be better for me to take a job that paid less but which did not require the travel and stress that my former position created. I believe I did contribute as much as you did because I was around to help with the kids when they were young while you were out working all the time!”

“While I agree that you did a lot for them when our children were young, they are almost grown now and don’t require the same level of care and that has been the case for several years. You could have gone back to work several years ago and helped out more financially but you just don’t want to work a full time job. If that is what you want, that’s fine but I don’t think it’s fair that you should take half of what I have worked for while you stay home and take it easy,” responded Ellie.

So how did they work out their differences? The first thing they did was recognize how different their goals were. Once they saw that they each wanted something different, it became clear to both of them that what they had first thought would be a temporary separation would become a divorce.

While we did talk about the law and how it might be applied to their situation most of the conversation was focused on what each felt was “fair”.

“I just want to stay in the house for a couple more years until the kids are on their own” said Ellie.

“That sounds fine with me” responded Geoff, “but I’d like to live in a house too and not throw my money away by renting an apartment.”

As far as assets, Geoff had a retirement account from his prior employer that was worth about $50,000 as well as a savings account from the sale of that business that was worth about the same amount while Ellie had a good job and a pension that would pay her a monthly benefit when she retired. She also had good credit, a small mortgage and the ability to borrow against the equity in the house.

In court there is little doubt what would have happened. Geoff’s savings and retirement would have been divided equally and he would have received a portion of Ellie’s pension when she retired based upon how long they were married while she was working.

It is also likely that the court would have required that the house be sold when the youngest child finished high school, which was only a couple of years away.

Although Ellie probably may have had to pay spousal support to Geoff, he would have had to pay child support to her for the children until they were emancipated while Geoff probably would have wound up in an apartment since he would not have received his equity in the house until it was sold several years later.

Instead, they decided to make a clean break. Ellie waived her claim to the savings and Geoff’s retirement accounts, took enough from the home equity line to buy Geoff out of the house and he waived any claim to the house and her pension.

She also waived any claim for child support (she could do this because she had sufficient income to meet the needs of the children without it) and he waived any claim to spousal support since he could now pay cash for his house and he did not need it.

By resolving their issues with divorce mediation Geoff and Ellie were able to create an agreement that worked for both them. It also meant they did not have to continue to live together for an extended period while the matter was proceeding though court and to live in a way that was consistent with their values; Geoff in a condo that did not require him to find a job he did not want and Ellie in a house that she did not have to sell until she was ready. It also gave her the ability to decide for herself when to retire.

Sometimes “fair” does not necessarily mean “equal”; just ask Geoff and Ellie.

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