I am often asked if it is possible to mediate a high-asset divorce. The answer is a resounding yes. However, in moving forward, you might want to ask yourself two questions. Why would you want to mediate the divorce and then, how do you mediate the divorce.
Why should you mediate a high-asset divorce? First, you will save literally thousands of dollars. I litigated high asset divorces for nearly 30 years. There was a lot of money to be made off high asset divorces. First, there is the discovery process. Whether it is solely to earn higher fees or to cover the proverbial ass, attorneys will engage in a substantial discovery process in a high asset divorce. The more assets to discover, the more ways to discover them. There are Interrogatories and Requests for Production, Requests for Admission and Depositions, Subpoenas, and more, all of which cost another fee or another $10,000 retainer.
Then you must analyze the discovery and send updated discovery then analyze the other party’s discovery answers and send more discovery. You must hire experts to evaluate and interpret the numerous documents. And then do more discovery to satisfy the experts.
If you choose to mediate your high asset divorce, you will need to bring your own documents, as there is no formal discovery process in mediation. If there is discovery, it is done informally and upon agreement of the parties.
Secondly you may wish to mediate your high asset divorce in order to preserve your relationship with your co-parent if you have children together. The more you fight over your assets, the less energy you have for amicability and co-parenting. Very few children are damaged because the parents had fifty-fifty timesharing instead of a 9/5 or less. Don’t spend your money fighting over your children. It is the fight that damages them, not the timesharing arrangement.
Once you’ve decided to move forward with mediation. How do you go about it? First you need to identify all of your assets. This will be done with your partner and additionally, with the mediator. The mediator will send a request for documents and you and your partner will discuss who will gather which documents. In this process you will have to rely on your partner’s disclosures regarding documents. If you have no idea what your assets are, mediation is probably not appropriate in your case.
You can do a little of your own detective work however. What arrives in the mail? Take pictures of envelopes so you know at least something has arrived from Charles Schwab or Fidelity and then ask your partner to produce it. Bring tax returns to the mediation. Ask your tax preparer what you own. But also, the mediator can help examine the returns and ask certain questions if you at least produce the documents. The mediator won’t advise you on what you should do with the assets, but will inform you of the law.
As you prepare for mediation, identify the assets by categories and then associate values with each asset. If you own a house, get a market analysis or appraisal to ascertain the value. Your categories of assets should generally be as follows:
- Real estate, Vehicles, Cash
- Bank accounts, Household furnishings, Money owed to you
- Investments accounts, Business interests, Securities, stocks
- Retirement accounts, Patents/copyrights, Other assets
Talk to your partner about asset values. The value of almost everything can be discussed and mediated to some extent and most of this can be done in mediation through the assistance of the mediator. With respect to a house, which is generally the community’s biggest asset should the value of the house include the cost to refinance or the cost of sale. Should repairs be included? Must the house be sold? If not, who will keep it. But just because there is a lot to discuss and you and your partner don’t agree, doesn’t mean you shouldn’t mediate. In fact, it means you should.
Regarding retirement accounts, you might want to know whether the account is more like a 401(k), with an actual account balance, or more like a pension that provides an income stream until death. You will want to discuss whether the pension payments can continue after the retiree’s death. Regarding investment accounts, you might want to know whether the IRA is a Roth, which provides the owner non-taxable payments after age 59 ½ or a traditional which will be taxed at the owner’s current income tax rate, upon reaching age 59 ½.
If you think this all is very overwhelming, it won’t be much less overwhelming with attorneys but it will be a lot more stressful and a lot more expensive. Use an experienced mediator, do your research and bring a lot of questions to the mediation.