Mediation for High Net-Worth Divorces

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There are multiple processes you can use to get a divorce in Michigan. Which is best depends on your circumstances, your ability to cooperate and communicate with your spouse, and your goals in the case. Mediation for high net-worth divorces can be a way to protect your interests and your privacy, giving you more control over the outcome of your case. However, mediation isn’t right for everyone. Find out whether mediation, litigation, or another option is better for you and your family.

Litigation vs Mediation for High-Net Worth Divorces

Two of the most common divorce processes are litigation and mediation. In fact, in most cases, after a complaint for divorce has been filed in the Michigan courts, the parties will be ordered to attempt mediation before the matter is set for trial. Both mediation and litigation have their benefits and drawbacks.

One common mistake in high-asset divorce is failing to consider alternative dispute resolution options like mediation. Mediation can be a smoother process and avoid the high conflict that comes with a trial. However, it can also create challenges when the parties are far apart in their positions, or disagree on key aspects of the case. Understanding the benefits and drawbacks of litigation and mediation for high-net worth individuals can help you make an informed decision in choosing the right divorce process.

Benefits of High-Asset Divorce Mediation

Facilitated mediation is a form of alternative dispute resolution which allows divorcing parties to come together and negotiate a settlement agreement to control the division of property, lay out the payment of spousal support and child support, and set custody and parenting time for parents. It offers many benefits to wealthy families.

Efficient Divorce Processes

Divorce mediation is one of the smoothest and easiest forms of divorce resolution available. In low-conflict cases it can get your case resolved faster and with fewer trips to the courthouse than traditional litigation. The process is also highly flexible, allowing you and your spouse to pause to gather information, or to consider specific aspects of the case with your attorney before resuming negotiations.

Confidential Mediation Negotiations

One of the benefits of mediation most helpful to highly influential families (including celebrities) is that unlike litigation, mediation is entirely confidential. Michigan court rules say that anything said during mediation stays in mediation. Only the final settlement agreement of the case can be recorded (either through a digital recording or in a confidential settlement agreement). Everything else is explicitly excluded from any later court hearings. This means that the parties’ substantial assets, confidential business arrangements, and controversial behaviors all stay out of the public record.

Flexibility in Crafting Settlement Agreements

While many aspects of Michigan divorce law involve the weighing of many factors, the practical reality is that child support and property division often come down to math equations. Even child custody is often resolved by resorting to set schedules when left to the courts. But when you and your spouse mediate a settlement agreement, everything is on the table. If you need to negotiate parenting time exchanges to avoid unwanted press attention, you can do that. If you want to craft a property division that protects business assets by giving the other spouse a greater share of retirement assets instead, that is an option. The flexibility afforded to parties in mediation gives both spouses control over the details of their divorce that might get missed during traditional litigation.

Tax-Savvy Property Divisions

Most attorneys, and even judges, are not trained in tax law. That means when high-net-worth marital assets are divided, it can sometimes have substantial unintended tax consequences. Mediation allows the parties to get input from the family accountant or financial advisor on how any proposed settlements may be treated by the IRS or other financial institutions. That way there are no surprises. If one spouse is going to have to pay substantial taxes or penalties (such as the taxes attached to spousal support), those amounts can be factored into the settlement agreement to ensure a fairer distribution of property.

When Not to Use Mediation for a High-Net-Worth Divorce

While there are many benefits to high-asset divorce mediation, it will not resolve every case. Here are some circumstances when mediation may not be the right solution:

Power Imbalance Between the Parties

When one spouse has a high-income position, it is common for the other to take a supporting role, possibly as a stay-at-home parent. However, this disparity in income and assets can create a power imbalance between the parties that can make it harder to reach a fair resolution in mediation. When one spouse is dependent on the other for their basic living expenses, let alone attorney fees, that dependent spouse may feel pressure to say yes to an agreement that isn’t in the best interest. They may need a judge to rule even the playing field and ensure both sides are treated fairly.

This is especially true in cases involving domestic violence. When the day-to-day family dynamic includes one spouse exerting power and control over the other, that same dynamic can make it hard to mediate, since successful mediation requires both parties to agree.

Concealed Assets or Refused Discovery

In some high-asset cases, one party holds all the information about the family’s assets. When that happens it can create challenges in reaching a mediated settlement because the other party simply does not know if the agreement is fair. If you believe your spouse is concealing assets or if they have refused to produce information about their accounts during discovery, it may be wise to use the tools available through litigation to compel disclosure of that information. You may still be able to mediate once you have a clear understanding of the marital estate, but if you settle before your questions are answered, it may hurt you in the long run.

Complicated Legal Issues

High-net-worth divorces sometimes involve complicated legal questions such as whether specific assets are “separate property” (which is generally awarded to the title holder) or “marital property” (which can be divided regardless of formal ownership). The resolution of these questions can often drastically affect potential settlements. In those cases, an early motion for partial summary judgment filed with the judge can give the pirates guidance to resolve their dispute.

Negotiations Fail

Ultimately, sometimes negotiations fail. You and your spouse may be too far apart to settle, or may have a fundamental difference of opinion on what is best for you or your children. When that happens, the best thing to do is walk away from mediation and proceed to trial. This should not be viewed as a failure. Instead, you are protecting your interests and your children, and allowing the Court to resolve the dispute.

Get Help Deciding Whether to Use Mediation for High Net-Worth Divorce

At Nichols, Sacks, Slank, Sendelbach, Buiteweg & Solomon, we can help with high-asset mediation in two ways: our attorneys act as neutral mediators, facilitating parties’ negotiations. We also represent high-net-worth clients in mediation and divorce litigation through the Michigan courts. We can help you decide whether to use mediation in your high-net-worth divorce. Call 724-994-3000 to schedule a consultation with one of our experienced Michigan divorce attorneys or arrange a mediation.

Categories: High Asset Divorces