A high net worth or high asset divorce is one in which couples have significant income and assets. Their annual income often runs into the mid to high six figures, and they typically have a net worth that as well into the seven figures or even higher. Those who are in this category usually have a much more complex financial picture than an average couple, and when they separate or get divorced, they often assume that the division of assets will be too complicated and difficult to handle using a process like mediation.
Divorce mediation is becoming an increasingly preferred alternative to traditional litigation, and it is not hard to see the appeal of mediating a divorce rather than going to the courts. A typical divorce can cost upwards of $20,000 or more for attorney fees alone, while the divorce can usually be handled through mediation for a fraction of that cost. Mediation can also be finished much sooner, and the process is entirely confidential, flexible, and typically far less acrimonious than litigation.
While the numerous potential benefits of divorce mediation seem very attractive to high net worth couples, some are still apprehensive about the process. Much of this is based on the common misconception that complex financial issues cannot be effectively resolved through mediation. The truth is that mediation is no different in this regard than if the spouses hired attorneys and went to court.
When divorce attorneys represent high net worth individuals, they do not handle everything by themselves. Their area of expertise is the law, and they will often need to call on outside specialists such as CPAs, business evaluators, forensic accountants, and other professionals to help with various aspects of the divorce. What many people do not realize is that these same professionals are used when needed during divorce mediation as well.
At AMS, for example, we work closely with a team of skilled professionals who have extensive experience with some of the most complex financial assets; including family-owned and closely-held businesses, franchise businesses, commercial real estate holdings, complicated business arrangements (such as stock options and deferred compensation), international investments, and rare and unique assets. Whatever the level of complexity your finances bring, we are fully equipped to handle it.
What about Protecting my Interests?
You might be thinking, “it’s nice that you can handle our complex financial situation, but how can I be sure that my interests will be protected if we mediate the divorce?” This is a valid concern, and one that is often brought up when one spouse is worried that the other will walk all over them if they do not hire a good lawyer.
First of all, spouses who go to mediation are totally free to hire an attorney as well so they can receive expert legal advice during the process. Secondly, mediation is a voluntary process that is conducted in a cooperative rather than combative environment. Although the mediator facilitates the process, both participants must agree to any settlement that is reached, and nothing can be imposed upon someone that is against their will. Mediators are trained professionals who guide the discussion toward finding common ground and developing a resolution that is acceptable all parties involved.
Mediation is certainly not for everyone, and spouses need to enter the process with the mindset that they are willing to cooperate and work together toward an amicable settlement. Most often, the process is successful, and the spouses are able to resolve their divorce without a long, drawn-out court battle. But if the couple is unable to come to a resolution, all that is lost is a little bit of time and money.
Why Mediation Makes Sense for High Asset Couples
If you are a high net worth couple that is considering divorce, you can either litigate or mediate. The same types of professionals will participate in the process either way, and as far as the division of assets goes, the end result is likely to be about the same. With divorce litigation, however, you will be spending a whole lot more of your hard-earned money on legal costs, and depending on the complexity of your situation, the process could take years rather than months complete.
Mediation can be used for a wide range of relational situations beyond just a divorce. For example, we have been able to use mediation successfully for separations, post-divorce matters, and other family-related issues.
In the case of a separation, this could be a temporary or trial arrangement to decide whether or not the couple should divorce, a permanent arrangement between a cohabitating couple that has children and joint assets, or a permanent arrangement for a married couple that does not want to divorce for various reasons.
When a couple that intends to separate wants to go to mediation, they often wonder whether it is best to start the mediation process before or after separating. This is a very important question, because doing things in the right order can make the separation go far more smoothly and prevent a lot of potential problems down the road.
I always tell my clients that it is best to start mediation before you separate, because in my experience, I have found that many couples have not thought about all the issues they will need to address during the separation.
Unless you have not been together for very long, separating usually involves more than just a change in sleeping arrangements. There are many other things that typically need to be dealt with, which may include:
- Living Arrangements: Who will live in the current home and who has to move out? Who will get what from the home? This would include the pets, furniture, and other personal property. If both parties are moving out, will the home be put up for sale?
- Co-mingled Finances: The longer you have been together, the more entangled your finances have most likely become. You may have jointly owned assets, such as the home, vehicles, and personal property. And you may also have credit cards, personal loans, and other types of debts that are in both names. Some couples have even more complicated financial situations, particularly those with significant and unique assets such as family-owned businesses, extensive real estate holdings, stock options, and international investments. We have the capability to handle separations and divorces involving all levels of financial complexity.
- Children: If you have children together, this will of course be the most important issue you need to address. You will need to develop a workable custody and parenting plan, so the kids have a predictable schedule and they will know what to expect. You will also need to discuss where your kids will go to school, birthday and holiday schedules, grandparent visitations, the best way to approach the subject of the separation with the children, and many other issues.
- Support Needed: If there is a major imbalance between the incomes of the two parties, there may also need to be a discussion about what level of support (if any) will be provided. These and other financial issues need to be worked out very carefully, especially if the separation is a prelude to a divorce. If this is the case, whatever is agreed upon at the time you separate will most likely be seen as the default arrangement when/if divorce proceedings begin.
Just reading through this list, some issues may have come to your mind that you may not have previously considered. And if you decide to move out right away without dealing with them, it could lead to serious conflicts later on.
I help couples approach separation mediation in a very thoughtful way, so they do not miss anything important that could come back to haunt them down the road. Couples emerge from the process with a formal separation agreement that addresses all the important issues, allowing them to be fully prepared for the next chapter in their lives.
The short answer to this question is “no.” It is not necessary to file for divorce in court before you begin mediation, and it is not in your best interests to do so. Once you file with the courts, a hearing date is scheduled, and the clock starts ticking. It is best to engage in divorce mediation with as few outside pressures as possible and imposing a court deadline by which mediation “has” to be completed puts undue stress on the participants.
It is also important to point out that if you choose to go to divorce mediation, it will not be necessary to go to court later to litigate any of the matters that are resolved through the mediation process. Mediation serves as an alternative to litigation, and participants are able to work out the issues that need to be settled (in a divorce) on their own with the help of a divorce mediator. These include child custody and visitation, alimony/spousal support, division of the marital estate, and many others.
With mediation, the terms and conditions of settlements around critical matters that will significantly impact the futures of everyone involved are controlled by participants, rather than the courts or the attorneys. The mediation process provides room for flexibility and creativity, and it allows participants to come together in a cooperative rather than combative environment that is more conducive to developing joint resolutions.
Once divorce mediation is completed and a settlement is agreed to, a legally enforceable agreement is drafted by an attorney and filed with the court for review and approval. At that point, the terms and conditions of the settlement are just as legally binding as anything that would have been imposed by the court or negotiated between attorneys representing the divorcing parties. The main difference being that participants are able to save untold amounts of time and money by bypassing divorce litigation and coming up with a more peaceable and workable resolution on their own.
Can we still Mediate if we Have Already Filed for Divorce in Court?
Absolutely. If one party has already served the other and started the court process, you can still enter into mediation and work out your major decisions regarding your finances, children, and other areas together. Once divorce has already been filed, however, you will need to notify your attorney that you have decided to go to mediation and resolve your issues instead of continuing to go through your respective attorneys. At that point, the divorce filing may be withdrawn or put on hold to give you more time to complete the mediation process. If the divorce papers are withdrawn, a new filing will be initiated after mediation is completed.
What if We Can’t Agree on All the Issues During Mediation?
Divorce mediation has a very high success rate, because couples usually understand beforehand that they need to enter the process with a cooperative mindset, and they are strongly incentivized to make the process work for them. That said, should there by chance be an issue that can not be agreed to in mediation, it does not mean that mediation was a waste.
An agreement can still be prepared on the issues that have been resolved, and you have the option to either have attorney’s negotiate with one another and possibly litigate the unresolved issue or come back for another session or two of mediation to try and resolve them. Generally, if mediation can work to settle most issues, you can usually settle the rest of them if given enough time. And once you have started the mediation process, it often makes sense to continue using it rather than shifting gears and going to court.
The bottom line is if you are considering mediation, you have very little to lose by at least giving it a try before filing for divorce with the courts. When you go to court, you are putting your divorce in the hands of a judge that may not necessarily be totally concerned about your best interests or the best interests of your child(ren). The mediation process can produce a much better outcome for all parties involved and allow you each to move one from divorce with greater ease and clarity for you and your family.
Recently, a divorced parent asked me my opinion on how to go about giving holiday gifts to her children. This was her first holiday season since her divorce, and immediately I knew that she and her ex-spouse most likely did not utilize the divorce mediation process.
The reason I say that is that mediation is a cooperative process in which parents come together and work together, with the help of a divorce mediator, to resolve potentially difficult issues, some which may revolve around the holidays. Some of the issues that are discussed during mediation include adjustments to parenting schedules during the holidays, who spends time with the kids and when, what activities the parents will continue to do together with the kids (if any), and how to handle holiday gift giving.
Like with all other important issues, the answer to how to go about giving holiday gifts depends on your specific circumstances, your unique family dynamics, and more specifically how engaged parents want to be with one another when it comes to giving gifts to their children.
Here are some general guidelines to help newly divorced couples with gift giving during the holidays:
Communicate and Coordinate
Going into the holidays after a divorce, it is always best to speak with your ex-spouse about how gift giving will be handled. It is good to talk about gifts well ahead of time, because couples tend to be less emotional about it when they are not already in the middle of the holiday shopping season, and they have more time to discuss and plan what they want to do. Try to be on the same page with your ex as much as possible, so you are both ready to make this the most joyful season possible for your kids.
Decide Where Gifts are Coming From
One of the first things you need to work out is how to present the gifts to your children. Will they be given separately? Will they come from both of you jointly? Or maybe some of each. If you have young kids who still believe in Santa, this can be a big help with your holiday gift giving. If you buy some gifts jointly and present them as coming from Santa, this can give your kids a tradition that is familiar and remains constant, even though their parents are divorced. Some couples I work with also continue to spend time together as a family while their young children open gifts from Santa.
Establish a Budget
Some couples I work with set a budget and one parent is responsible for picking out joint gifts. Other parents want to establish separate gift giving, but they agree on limits so that one parent who may be at a financial disadvantage doesn’t feel like the other parent gets to buy all of the expensive gifts. Whichever way you decide to do it, it works best to have a set amount that you and your ex agree to spend on holiday gifts.
Don’t Make This a Competition
Picking up on the last point, never make this a competition with your ex over who can give the best and/or most expensive gift. Establishing a budget can help prevent holiday gift giving from devolving into a competition. But you should also proactively discuss this issue with your ex and agree on some “noncompete” guidelines.
Remove the Conditions
In addition to what will be given to your kids, there may also be a question of where the gifts will be kept and even how they will be used (such as when you are giving your kids cash, gift cards, or other gifts with some flexibility). Parents should be very flexible about this issue and not attach strings to the gifts they give. For example, sometimes it may be more practical for your child to keep and use the gift at the other parent’s house. As much as possible, try to do what is best for your kids, even if it may be a blow to the ego. And this brings me to my last point…
Focus on the Kids
When in doubt, keep this one rule in mind; the holidays are not about you, they are about the kids. As such, your priority should be giving them the best holiday you can under the circumstances. Put your feelings toward your ex aside and do not do anything to undermine them or create tension within the family especially during this time of the year. And even if your ex does not reciprocate, be the bigger person, take the high road, and do everything you can to set a positive tone within the family.
Recently, someone I know thanked me for doing the work I do and for “saving relationships”. I often speak to people who are confused with what I do, and inevitably they ask me, “so do you help couples stay together” and I always have to explain that I’m not a marriage counselor.
This time I responded with, “unfortunately I don’t, I help couples separate and divorce in a way that reduces conflict and most importantly looks after the best interest of the children and the family as a whole”. This time the response I received stopped me in my tracks, she said “yes, I know what you do and you do help save so many relationships, not only the couple in helping them to avoid conflict and ugliness but also for the future of their children.”
People who know me know that I’m very passionate about what I do. And over the years, I’ve written extensively about the many reasons why I believe divorce mediation is one of the best ways for couples to dissolve their marriage. The mediation process can be completed for a fraction of the cost of litigation, and it can usually be done in a much shorter period of time. The process is entirely confidential, offers greater flexibility and control over the final divorce settlement, and it employs a cooperative rather than combative approach, which is far less stressful for divorcing couples.
As great as all of these benefits are, however, they pale in comparison to the long-term benefits of the process. One of the most overlooked aspects of divorce mediation is the positive affect it has on the long-term relationship between the spouses, and the impact this has on the children (if the couple has children).
We all know that divorce is never pretty. When a couple reaches the point in which they have decided that the marriage cannot be saved, there are naturally going to be conflicts and disputes that brought them to this point. But just because you are ending your marriage will no longer be life-long partners, this does not mean you and your spouse cannot maintain an amicable relationship.
Unfortunately, the divorce process itself often makes the relationship between the spouses worse. When you split up, there are issues that need to be settled, such as who keeps the house, how the rest of the assets are divided, and who gets custody of the kids. Long, drawn out court battles over these issues is not only expensive financially, but it can also be very costly with regards to the damage it does to relationships.
For example, when children are caught in the middle of a custody battle, they are in a no-win situation. They love both of their parents, and the last thing they ever want to do is pick sides between them. But sometimes, they feel like they have to.
Some parents do not realize the long-term effects conflicts like these can have on their children, and the entire family. I’ve known some children of divorce who don’t speak to their siblings because they hold different views of each parent and side with them. This trickles down for generations, and sadly, many people go to their graves without ever repairing relationships that were broken during their childhood.
Divorce mediation provides a way to help prevent this type of situation from happening. During mediation, couples are encouraged to find common ground on the issues that need to be resolved, develop peaceable and workable resolutions (for these issues), and part ways amicably. And when children see that their parents are able to resolve their divorce and still maintain a good relationship, it makes it much easier to accept what happened and adjust to their new reality.
This is an intangible benefit of mediation that you cannot put a price on, and it is the biggest reason I do what I do.