Are you a FIRE couple? Are both of you deeply invested in the “Financial Independence Retire Early” lifestyle? If so, you may think your divorce is too complicated for mediation. Perhaps surprisingly, however, the opposite could be true, even if you have a financially complex situation.
FIRE and Divorce
Typical FIRE couples live below their means and focus on building multiple streams of income to facilitate an early exit from a traditional career path. For some, this means planning for full retirement by their 30’s or 40’s. For others, it means building a passion project as a side hustle, until it brings in enough income to be a viable full-time pursuit.
Regardless of exactly where your lifestyle fits into the FIRE paradigm, divorce is likely to be challenging. The separation process can throw even the most carefully crafted financial plans into chaos. Still, with the help of a good consulting attorney, a financial advisor and a skilled mediator, it will be possible to maintain financial independence and stability during and after divorce.
Avoid High Conflict to Preserve FIRE Goals
If divorce appears to be imminent, remember that the more you can agree on outside the courtroom, the more your life plans can remain intact. Court battles are always expensive and time-consuming. Mediation is generally a much faster and more cost-effective route. It may be especially appropriate for FIRE couples, because the FIRE lifestyle is out of the mainstream. Judges are unlikely to have the time or the patience necessary to assess complicated and unusual financial arrangements. Couples in mediation can negotiate issues without worry that a judge may look askance at the unorthodox nature of their FIRE plans.
Be Sure to Consult with an Attorney
While mediation does not require as much legal help as a litigated divorce, you will need a consulting attorney to protect your individual interests. Your mediator can give you some information about the law, but only an attorney can advocate on your behalf. Navigating the ins-and-outs of equitable distribution and the potential impact of spousal and child support laws can be complicated. It is also critical to have legal help crafting a Marital Settlement Agreement (MSA), especially when it comes to plans for early retirement. New Jersey law considers early retirement to be any time before age 66 or 67, depending on when you were born. Those wishing to retire before this must prove that their plan is reasonable and in good faith. Incorporating a plan into an MSA can avoid a court battle over it later.
Even with attorney assistance, mediation results in lower costs because attorneys do not need to prepare for and appear in court. Participants generally agree to exchange information informally instead of resorting to formal discovery. The more open and honest you can be with each other, the faster, less expensive, and less stressful your divorce is likely to be. If you and your spouse end up unable to resolve one or more issues, you can always go to court for a resolution on those discrete matters.
Consider Using Experts
Because you may have complicated financial issues to sort through, you may need to use experts in your divorce. Sometimes people assume that this means mediation will not work, but this is far from the truth. Experts can present reports for mediation and even appear in person if necessary.
What kind of financial experts do FIRE couples typically need? Here are some examples:
This may be an accountant or financial planner with additional training in resolving common divorce issues. Some have special certifications, such as “Certified Divorce Financial Analyst” (CDFA). You can hire a financial expert individually to help you optimize your post-divorce financial situation. You and your spouse can also hire a joint specialist to evaluate the financial implications of any potential support payments or property distribution plans.
FIRE couples often have unusual physical assets, such as multiple rental properties. Appraisers can provide accurate valuation of real estate, as well as other valuable property, like jewelry, artwork, or collectibles.
Business Valuator or Business Appraiser.
FIRE couples are often entrepreneurial, owning one or more businesses. Sometimes these are unusual businesses, such as income-generating websites or YouTube channels. This can result in numerous financial issues. Is the business separate or marital property? What is the value of the business? What is the value of its income stream for purposes of child or spousal support? Business valuators are usually CPA’s who specialize in analyzing the assets, liabilities, and capital of specific types of companies. The more unusual your business is, the more important it is to have an evaluator with appropriate knowledge and experience.
If either or you have a pension or a life insurance policy, you may need an actuary. Actuaries use long-term data to make economic and demographic assumptions and employ statistical analysis to determine the present cash value of assets like pensions and life insurance.
Employability or Vocational Expert.
If you are in the early phases of the FIRE lifestyle, it is likely that both of you are fully employed and working at your maximum income potential. If, however, one of you is planning to cash in and retire soon, and the other is not in agreement with this plan, you may need an employability expert.
How to Use Experts in Mediation
Deciding on which types of experts you need is just half the battle. You also need to decide whether to use individual or joint experts. Agreeing to use the same experts can save you money, but it is not always the best choice. For example, if an asset has a highly variable or subjective value, it may be worthwhile for each of you to get your own opinion, as experts tend to resolve any question marks in favor of the person who hires them. One very good neutral expert, on the other hand, will generally know how to split the difference. It doesn’t have to be all one way or all the other. You might decide you need just one real estate appraiser but want to hire two separate financial advisors.
Sometimes you can also save on fees by agreeing to have your experts prepare abbreviated reports. Full-scale reports are generally necessary for litigation but may not be for mediation. Most importantly, be sure that whoever you choose has a good reputation and the right kind of experience.
Moving Forward Post-Divorce
As a FIRE couple, you are undoubtedly both financially savvy already. This will be an enormous asset in your post-divorce life. While divorce is often a temporary setback, people with high financial literacy generally possess all the tools required to move on successfully. Mediation can also minimize any setbacks.
Is mediation the best choice for every FIRE couple? Not necessarily. Contact one of our experienced family law mediators for more information! For an initial consultation, use our divorce mediation contact form or call us at (888) 888 1383.
Is “Nesting” Right for Your Family?
In our last post, we talked about nesting and how it could fit into a broader parenting plan. As we discussed, nesting is usually a temporary arrangement. It can offer children stability while parents transition from being a married couple to being two single parents. Today, we will look at two couples who tried nesting and see how it worked out for them.[i] Read more
Does Nesting Fit into Your Parenting Plan?
Is Your Parenting Plan Ready for School?
Mediation and Legal Custody
Under the New Jersey custody statute (N.J.S.A. 9:2-4), parents begin with equal rights. A court can, however, order any custody arrangement it determines to be in the best interests of the child (N.J.S.A. 9:2-4(c). Joint legal custody is the most common arrangement. Sole legal custody, which grants one parent the right to make all major decisions, is far less common. Legal custody is not necessarily related to physical custody. Sometimes parents also share physical custody equally, but often the child lives with one parent most of the time. Read more
Family Mediation: Not Just for Divorce
In recent years, the popularity of mediation for divorce has skyrocketed. People have learned that mediation can often save time and money, while also preserving harmony among family members. Many people still do not know, however, that family mediation is not just for divorce. It can be useful in addressing many types of conflict. Read more
Divorce Mediation and FIRE
Are you a FIRE couple? Are both of you deeply invested in the “Financial Independence Retire Early” lifestyle? If so, you may think your divorce is too complicated for mediation. Perhaps surprisingly, however, the opposite could be true, even if you have a financially complex situation.
FIRE and Divorce
Typical FIRE couples live below their means and focus on building multiple streams of income to facilitate an early exit from a traditional career path. For some, this means planning for full retirement by their 30’s or 40’s. For others, it means building a passion project as a side hustle, until it brings in enough income to be a viable full-time pursuit.
Regardless of exactly where your lifestyle fits into the FIRE paradigm, divorce is likely to be challenging. The separation process can throw even the most carefully crafted financial plans into chaos. Still, with the help of a good consulting attorney, a financial advisor and a skilled mediator, it will be possible to maintain financial independence and stability during and after divorce.
Avoid High Conflict to Preserve FIRE Goals
If divorce appears to be imminent, remember that the more you can agree on outside the courtroom, the more your life plans can remain intact. Court battles are always expensive and time-consuming. Mediation is generally a much faster and more cost-effective route. It may be especially appropriate for FIRE couples, because the FIRE lifestyle is out of the mainstream. Judges are unlikely to have the time or the patience necessary to assess complicated and unusual financial arrangements. Couples in mediation can negotiate issues without worry that a judge may look askance at the unorthodox nature of their FIRE plans.
Be Sure to Consult with an Attorney
While mediation does not require as much legal help as a litigated divorce, you will need a consulting attorney to protect your individual interests. Your mediator can give you some information about the law, but only an attorney can advocate on your behalf. Navigating the ins-and-outs of equitable distribution and the potential impact of spousal and child support laws can be complicated. It is also critical to have legal help crafting a Marital Settlement Agreement (MSA), especially when it comes to plans for early retirement. New Jersey law considers early retirement to be any time before age 66 or 67, depending on when you were born. Those wishing to retire before this must prove that their plan is reasonable and in good faith. Incorporating a plan into an MSA can avoid a court battle over it later.
Even with attorney assistance, mediation results in lower costs because attorneys do not need to prepare for and appear in court. Participants generally agree to exchange information informally instead of resorting to formal discovery. The more open and honest you can be with each other, the faster, less expensive, and less stressful your divorce is likely to be. If you and your spouse end up unable to resolve one or more issues, you can always go to court for a resolution on those discrete matters.
Consider Using Experts
Because you may have complicated financial issues to sort through, you may need to use experts in your divorce. Sometimes people assume that this means mediation will not work, but this is far from the truth. Experts can present reports for mediation and even appear in person if necessary.
What kind of financial experts do FIRE couples typically need? Here are some examples:
Financial Specialist.
This may be an accountant or financial planner with additional training in resolving common divorce issues. Some have special certifications, such as “Certified Divorce Financial Analyst” (CDFA). You can hire a financial expert individually to help you optimize your post-divorce financial situation. You and your spouse can also hire a joint specialist to evaluate the financial implications of any potential support payments or property distribution plans.
Appraiser.
FIRE couples often have unusual physical assets, such as multiple rental properties. Appraisers can provide accurate valuation of real estate, as well as other valuable property, like jewelry, artwork, or collectibles.
Business Valuator or Business Appraiser.
FIRE couples are often entrepreneurial, owning one or more businesses. Sometimes these are unusual businesses, such as income-generating websites or YouTube channels. This can result in numerous financial issues. Is the business separate or marital property? What is the value of the business? What is the value of its income stream for purposes of child or spousal support? Business valuators are usually CPA’s who specialize in analyzing the assets, liabilities, and capital of specific types of companies. The more unusual your business is, the more important it is to have an evaluator with appropriate knowledge and experience.
Actuary.
If either or you have a pension or a life insurance policy, you may need an actuary. Actuaries use long-term data to make economic and demographic assumptions and employ statistical analysis to determine the present cash value of assets like pensions and life insurance.
Employability or Vocational Expert.
If you are in the early phases of the FIRE lifestyle, it is likely that both of you are fully employed and working at your maximum income potential. If, however, one of you is planning to cash in and retire soon, and the other is not in agreement with this plan, you may need an employability expert.
How to Use Experts in Mediation
Deciding on which types of experts you need is just half the battle. You also need to decide whether to use individual or joint experts. Agreeing to use the same experts can save you money, but it is not always the best choice. For example, if an asset has a highly variable or subjective value, it may be worthwhile for each of you to get your own opinion, as experts tend to resolve any question marks in favor of the person who hires them. One very good neutral expert, on the other hand, will generally know how to split the difference. It doesn’t have to be all one way or all the other. You might decide you need just one real estate appraiser but want to hire two separate financial advisors.
Sometimes you can also save on fees by agreeing to have your experts prepare abbreviated reports. Full-scale reports are generally necessary for litigation but may not be for mediation. Most importantly, be sure that whoever you choose has a good reputation and the right kind of experience.
Moving Forward Post-Divorce
As a FIRE couple, you are undoubtedly both financially savvy already. This will be an enormous asset in your post-divorce life. While divorce is often a temporary setback, people with high financial literacy generally possess all the tools required to move on successfully. Mediation can also minimize any setbacks.
Is mediation the best choice for every FIRE couple? Not necessarily. Contact one of our experienced family law mediators for more information! For an initial consultation, use our divorce mediation contact form or call us at (888) 888 1383.
Negotiating Personal Possessions in Divorce Mediation
Most people who choose divorce mediation are more easy-going than those who decide to fight over every single personal possession in divorce court. This is almost always a good thing. Being easy-going tends to make divorce less stressful, cheaper, and faster. It is important, however, not to let yourself become so laissez faire that you end up giving away the store. Read more
Can You Mediate if Your Spouse Might Not Be Honest?
Are you interested in divorce mediation but concerned that your spouse may not be honest? Such fears may or may not mean that mediation is out of the question. Before you jump into an expensive litigation process, take some time to think through your options. Keep in mind that the adversarial nature of litigation can contribute to secrecy. Mediation, on the other hand, generally fosters an atmosphere of openness. Read more
Divorce Processes: Litigation, Mediation and Collaborative Divorce
If you have been thinking about divorce, or you are somewhere in the process of divorce already, the beginning of a new year is a great time to move things forward. Maybe you are wondering about mediation and want to know if it is a good option for you, but you are still not clear on how exactly it differs from other divorce processes. Read more
Peace Through Mediation
All of us at the Weinberger Mediation Center are wishing you peace throughout the holiday season. Whether you are in the middle of a divorce or are just beginning to think about separating, keeping things peaceful is one of the best things you can do for your own mental health. It is even more important if you have children.
Protecting children from parental conflict is important for all types of families, not just those going through divorce. While a certain degree of family conflict is normal, research shows that children who are exposed to prolonged conflict between their parents are at heightened risk of emotional and behavioral issues, such as poor concentration, depression, and anxiety. Coping with the pandemic over the past couple of years has been especially challenging for many families. The holiday season, while generally a happy time, is also well-known to be stressful. It is no surprise then, that many families are struggling with conflict.
Children and Divorce: Protecting Mental Health
Increased parental conflict is an especially pronounced issue for families going through divorce or separation. In January of 2021, yet another study confirmed this. The Research and Education Advancing Children’s Health (REACH) Institute, at Arizona State University, found that when divorced or separated parents engage in conflict, their children experience fear of abandonment. Even worse, this feeling is not necessarily transitory; it can predict future mental health problems. Strong relationships between children and parents, which generally act as a buffer against childhood stress, did not, in this study, mediate the effects of parental conflict. In fact, the study found that children who had strong relationships with their fathers were especially likely to experience mental health issues.
Choosing Mediation for Peace
Clearly parents would do well to make the pursuit of peace one of their top resolutions for the New Year. Mediation is one of the best ways to accomplish this. In the coming months, we will be reviewing some basics of divorce mediation. Along the way we will focus on keeping things peaceful and protecting the mental health of everyone in the family.
Divorce will always be challenging, but it does not have to be devastating. It can, in fact, pave the way for a brighter future for everyone. This future can start all the sooner when both spouses approach the divorce process with mutual respect and consideration.
If you are one of those lucky couples who are confident that you will be able to separate as friends and present a united front to your children, you are probably already pursuing mediation or at least considering it. If, on the other hand, you are doubting that you and your difficult soon-to-be-ex would make good candidates for mediation, you may want to reconsider that. Ultimately the process is not going to work for everyone. We will have plenty of tips, however, to help high conflict couples navigate their way through. If you are willing to put in the effort, there is a good chance of success.
Here’s to a wonderful new start. Happy New Year!
If you are ready to discuss mediation with one of our trained and experienced divorce mediators, contact us today for an initial consultation.