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Brian Burke: About Your Divorce (Letter 108) — Oblique Divorce Strategy #6

Oblique Strategy #6 — In every case there is a point at which it is ripe for settlement.

Dale and Roy made a mutual decision to separate. Dale found a good apartment and gave Roy his choice: He could move to the apartment or stay in the house. Roy dilly-dallied and, eight days after he was given the choice, he came home from work to find a note from Dale. “Enough is enough. I’m out; you’re here. I’ll be back tomorrow night to divide the stuff. We should be able to do that at least.”

They couldn’t. First they argued about the proper way to divide. Your choice; my choice. But who goes first? What if I really want something that’s not valuable but use one of my choices to get it and you choose something that would cost a lot to replace? Wait a minute, that’s mine. My mother gave it to me for my birthday four or five years ago. You don’t believe me? Then call her! How do we decide what something’s worth? We should get it all appraised.

                                                                        •        •

Ron and Nancy didn’t try to divide anything. Nancy’s lawyer told her to take only what she thought essential, to give Ron an inventory, and to leave the house looking like it did when Ron left for work. She said, “It should look the same to him. As long as he has his horrible La-Z-Boy recliner and his 75-inch flat-screen TV, I could take the rest and he wouldn’t notice anything was missing. But I get it, you don’t want him to be upset by my departure. He’ll be fine.”

Nancy’s lawyer explained that the house was community property. Since Ron was staying in it, he would be subject to a “Watts Charge” for the fair rental value of his use of her half of a community asset. She went online to Zillow and learned that the fair rental value of their house was $7,100 a month. The apartment she rented was $3,500 a month. Shortly after her move, she went back to the house to explain to Ron that he’d have to start paying her $3,500 a month in rent, in addition to the temporary spousal support they had agreed to.

That meeting went poorly. There was an NFL football game on TV, but the commercials were so frequent that conversation was possible with a willing participant. “What have you been smoking Nancy? The idea that I have to pay rent to live in my own house is absurd.” Nancy threatened to “tell her lawyer,” so Ron reluctantly agreed to call his own lawyer to confirm his belief that Nancy was nuts.

When they met the next time, Ron had been educated about the Watts Charge and had had time to think about it. When Nancy brought the subject up Ron was ready to pepper the conversation with the following points:

» Renters pay rent for a place they want to live in. I don’t want to live in this house. You just abandoned it, and you abandoned me.

» Where did that fair rental value come from? What’s Zillow know? Has Zillow ever been inside the house? Doesn’t it assume a year’s lease? How do we know I’m going to be living in the house for a year?

» I think that fair rental value is high because it assumes a month-to-month lease. There’s no way you could get me out of the place in a month.

» It’s too big for me to live in. I’ll tell you what. I’ll take the corner of the living room with the La-Z-Boy and my television. I’ll need a path to “my half” of the kitchen and another path to my half of the bedroom and my bathroom. You can have the rest. Rent it to whomever you want.

» You want $3,500 in rent from me. You have your junk in every room of this house. The storage charge to you for using space in my half of the house comes to … exactly $3,500.

                                                                        •        •

Rob and Marian shared the goal of reaching a settlement within 30 days of their separation. They agreed: (1) to the division of their retirement plans, (2) to the person with whom they would list their house for sale and the terms of the listing, (3) to the monthly amount and the duration of support Marian would pay Rob, and (4) to the amount Marian would pay Rob for his half interest in her professional practice.

“That should do it,” said Marian.

“What about the green chair in the kitchen?” asked Rob.

“The green chair?” Marian repeated incredulously.

“I want the green chair.”

“Rob, I made the green chair in high school shop.”

“You did good job.”

“Yeah, and it’s mine.”

“I thought we were going to settle everything.”

“Things I owned before marriage are separate property. Anything I get as a gift during marriage is separate property. Each person keeps separate property at the time of divorce. You keep yours and I keep mine. That’s really beyond discussion.”

“Beyond discussion? What else is beyond discussion?”

Now Marian was taken aback, “Well, my jewelry. I keep my jewelry, and you keep yours.”

“I don’t have any jewelry.”

“You never wanted any.”

“What about the ring we bought for your fiftieth birthday?”

“That was called a birthday present for which I thanked you. Let’s see, half of it was purchased with your half interest in money I earned. The other half was purchased with my half interest in money I earned. Happy birthday to Me. I give half of the ring to myself and you pay for the other half with money I earned.”

Rob argued, “It was an investment. We decided to buy the ring instead of taking a trip because the ring would hold its value or maybe appreciate. Have you had it appraised? Wait, we have an insurance appraisal.”

“Rob, forget about an appraisal. It’s mine. End of discussion.”

“Fine, end of discussion.”

                                                                        •        •

These are examples of conversations that take place early in divorce. The attempt to establish an amount for temporary support, the allocation of expenses, and the disposition of the “Watts charges” are often more complex than the real issues that will be resolved in a final settlement.

The typical South Santa Barbara County couple with at least one “professional income,” a house, deferred compensation accounts and some modest investments and savings intuitively defer dealing with all of the financial issues raised by divorce. Income continues to go into a joint bank account from which bills are paid, including the cost of the second residence. Credit cards are used as necessary and paid as possible. There is always a resort to savings and/or the creation of new debt. The rationale for these practices, if expressed, is, “We’re all going through a lot, and we aren’t going to put ourselves under financial pressure if we can avoid it.”

A divorce means “going through a lot,” and there is wisdom in postponing the financial effects it entails. During the Bargaining Stage of the grieving process associated with divorce at least three essential tasks are completed: (1) The couple works out a different — non-intimate — way to communicate with each other. (2) The couple works out a different — non-intimate — method for doing business with each other. (3) The couple becomes more and more realistic about the exact terms and the effects of their final settlement.

The apogee of the Bargaining Stage is what I call “The Stall.” It involves what sounds like intractable disagreement over an issue that’s minor compared to the size of the transaction dividing the entire marital estate. The “green chair” is one example. Here are three others:

» Husband agrees to pay off Wife’s credit card debt of $50,000. Time passes and he hasn’t received the credit card statements he’s supposed to pay. Why? She says, “It’s none of your business.” “How can I pay the balances without a statement?” “I give you the total. Write me a check and I’ll pay the balances.” “No, what if you don’t and credit card companies come after me for a second bite?” “I’ll pay.” “Maybe yes and maybe no. You didn’t pay on these accounts in the past or there wouldn’t be these balances.” “I didn’t have the money. Give me the money and I’ll pay.” “No. No statements, no payments.”

» A very large marital estate is divided by two. It all comes from a start-up company that Wife worked for. She’s never questioned her husband’s right to half of what she earned. She’s made various investments that can’t be objectively valued. She has given her husband the best information she can get but explains, “It’s a bet. I know these people and they are smart and driven, and I put our money on them.” She proposes, “I’ll buy out your interest for the cost of the investment or you can take the ride with me. We can leave the shares undivided and you get out when I do, or we can divide them and I’ll tell you when I’m selling and you can do whatever you think is best.” Husband gets out of some of the investments and stays with her in others.

The Marital Settlement Agreement is prepared. Husband’s single response is, “How many airline miles do you have?” Wife is aghast, “That greedy pig. I support him for ten years and make him a multi-millionaire at the end of the marriage and he wants my airline miles … .”

» A sizable estate is ready for division under the terms of a marital settlement agreement. It provides that “each party will pay his or her own attorneys’ fees.” The husband objects and insists that all fees be paid out of the community estate, before he knows the total amount of his lawyer’s fee and before he knows the amount of his wife’s attorney’s fee.

Once a couple hits The Stall the best thing to do for them is: NOTHING. Attempts to solve the problem with “external” solutions will be rejected and the solution itself will become tainted — even if it’s optimal. If a solution is somehow imposed, The Stall will continue over a deeper issue that doesn’t have solutions that can be objectively measured for effectiveness; these include almost any issue involving children.

The Stall is the harbinger of a wave of depression, which can last weeks or months. Even if I had the qualifications to diagnose the presence and severity of clinical depression, I wouldn’t be able to do it because the clients more or less disappear. They avoid contact with their lawyers, and they can’t and shouldn’t try to do the business necessary to conclude the case.

They can’t do business with each other – until they can. That’s when the case is Ripe for Settlement. The couple has been educated by their lawyers, their therapists, their financial advisors, their reading and by their own reflection. They know what’s possible and they’ve been able to consider the issues from both sides, so they know what will work. It usually happens at a lunch. Neither person starts by saying, “If you do such and such, I’ll do … .”

The template for the conversation is: “How about … ?” and “OK.” That’s all. The lawyers write it up. There is no haggling or backsliding or second-guessing or “just one more thing.”

In South Santa Barbara County, we know the window during which a typical case will become “ripe for settlement” is between 18 and 36 months. That period is established by the average and the median Interval between separation and entry of judgment during two different six-year periods of study. (The family law calendar was current during both of the periods studied. In other words, court delay did not contribute to the time it took for the completion of these cases.)

The 18- to 36-month window included the average and the mean Intervals for the entire population of interest in both studies. It included the mean and median Intervals for cases with and without children. It also included the mean and median Intervals for all of the subcategories based on the duration of the marriage being dissolved (the categories were: long marriage = 10+ years; medium = 5 to 10 years; short = 1 to 5 years; very short = less than one year).

For people unfamiliar with the experience of grief, an Interval of 18 to 36 months can seem unbelievably long. For people who have experienced grief, the timing is familiar and in line with what they expect. In either event the case will ripen in it’s own time, and it’s an event that’s well worth waiting for.

Next column: Oblique Strategy #7 — Is anyone hurt?

— Brian H. Burke is a certified family law specialist practicing family law and mediation in Santa Barbara. A researcher and educator in the field of divorce and family conflicts, he is also the creator of the Legal Road Map™. Click here for more information, call 805.965.2888 or e-mail [email protected]. Click here to read previous columns. The opinions expressed are his own.

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