Personal Property Arbitration in Divorce

couple in discussion with a lawyer

It’s not surprising that people fight over their children in divorce. And it’s not surprising that they fight over big assets, like the house or retirement funds. (It’s not good, but it’s not surprising). But it IS  surprising how often people will devote a lot of energy—and money—to fighting over personal property. And yet it happens all the time, creating great hostility and huge legal bills.

What is “personal property” in a divorce? Technically, personal property is tangible, movable goods (as opposed to real property, which includes houses and land). Personal property includes jewelry, collectibles, household furnishings, pots and pans, books, and so forth. Over the course of a marriage, a couple can accumulate a lot of personal property. Some of it will have significant financial value, but often, couples will fight bitterly over items that have sentimental value.

One attorney we know recalls a conference some years back with her client, his wife, and the wife’s attorney. The couple was bickering about who would take the CD collection (music, not bank accounts) in their divorce. The attorneys floated various proposals, but the spouses were entrenched: neither would be satisfied with anything less than the full collection.

After about 45 minutes, our colleague leaned over and whispered in her client’s ear that for what he was paying her for that day’s meeting, he could have purchased duplicates of every CD in the collection. She asked him if he wanted to continue fighting about it. (He didn’t.)

It is easy to let emotion carry you away in personal property negotiations in divorce. But as our colleague’s client realized, it is usually not worth it. Fortunately, for couples who cannot agree on how to divide their personal property in divorce, there is another option: arbitration.

What is Arbitration? How is it Different From Mediation?

Arbitration is a form of alternative dispute resolution (ADR). In arbitration, the parties agree (or are ordered by the court) to present their positions on a dispute to a neutral third party: the arbitrator. The parties sign an arbitration agreement in which they agree to abide by the arbitrator’s decision. The arbitrator essentially functions as a private judge. The arbitrator will receive evidence and issue a binding decision on the dispute. In a divorce, the terms of that decision will become a part of the couple’s property settlement.

Many people confuse arbitration with mediation, but there are important differences. While both arbitration and mediation are forms of ADR, they work differently. In family mediation, the mediator is a neutral party whose role is to help the parties negotiate an agreement. An arbitrator, on the other hand, is a finder of fact who issues a ruling.

An agreement that is reached in mediation can be incorporated into the divorce decree, but unless the couple chooses to do so, an agreement after mediation is not legally binding. By contrast, with arbitration, the decision is binding on the couple. What’s more, there is no appeal for an arbitration result.

That can be bad news if you feel the result is unjust. But arbitrators, like judges, do try to be fair. And the finality of an arbitration decision means that you can move on from the arbitrated issue, knowing your spouse cannot resurrect it. The final nature of arbitration makes it especially important that you are working with an experienced Minnesota divorce attorney.

Both mediation and arbitration involve a fee. But, as our colleague’s story above illustrates, spending a lot of time trying to negotiate through your lawyers does, too. When you’re spinning your wheels, and running up legal fees trying unsuccessfully to negotiate, having a definitive result from arbitration is worth the cost.

Advantages of Arbitration for Property Division in Minnesota Divorce

We’ve already talked about  how arbitration of marital property division can save legal fees and the frustration of ongoing negotiations. There are other advantages as well.

The final nature of arbitration is well-suited to property issues. Unlike custody or parenting matters, which demand flexibility, property division is best dealt with decisively to offer certainty to the parties, allowing them to move forward with their lives.

Another advantage of arbitration is privacy. This is especially important to many couples with significant assets. Unlike court proceedings, which are public record, arbitration proceedings are known only to the individuals involved.

Like other forms of ADR, arbitration can often be customized to meet the needs of the couple (which court proceedings definitely are not). Also, because arbitration is a private proceeding, it is often quicker than waiting for a court date.

If you have questions about resolving personal property issues in divorce through arbitration, please contact Mundahl Law. We offer arbitration services as well as representing clients in arbitrated matters to make sure they get the best possible outcome.

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