Dividing Complex Financial Assets in Divorce Mediation

Division of assets during divorce is a multifaceted process. It involves dividing things we commonly associate with separation or divorce, such as who gets the house or car or the furniture. While dividing these items has its challenges, there are other areas of asset division that are more legally nuanced. 

We’re talking about complex financial assets. 

Complex financial assets refer to assets that are difficult to divide, such as business interests, family estates, or marital property with a high valuation. These assets are often part of a high net-worth divorce, and dividing them not only carries significant financial implications but also can be a source of additional stress or concern for individuals. 

Many times, mediation can provide a strategic alternative to litigation and offer a productive way to reach a settlement. To help you understand your options, this blog post will provide a detailed answer to the question: how does dividing complex financial assets work in the context of divorce mediation?

Why consider mediation for dividing complex assets? 

There are several approaches to dealing with assets in a divorce. One increasingly common approach is the alternative dispute resolution method of mediation. 

Mediation differs from other legal processes, such as litigation, as it’s focused on fostering open and direct communication between individuals as they work through their issues. Accounting for factors like each spouse’s financial contributions and individual needs as well as the duration of the marriage, the mediator does their best to guide them toward a fair, balanced distribution of assets. 

Compared to courtroom decisions, divorce mediation allows for more flexibility and personalized solutions, with the goal of establishing a settlement that is satisfactory to both parties. 

Achieving this goal can help make the divorce a smoother transition for everyone involved and can help preserve family relationships following your divorce, especially if there are children.

Common complex assets found in high net-worth divorces

High net-worth divorces often involve the following complex assets:

• Stocks
• Bonds
• Retirement accounts
• Intellectual property
• Real estate
• Digital assets (such as cryptocurrency)
• Business interests (especially if valuing them is difficult, e.g., if their cash flow varies significantly from month to month)
• Assets located in other countries

In the context of divorce, these assets are considered complex because they can be challenging to divide equitably. A mediator who can provide the knowledge, compassion, and attention to detail required to resolve this situation will be an enormous help.

What are the legal considerations of complex assets in divorce? 

Dividing complex assets during a divorce can have significant legal implications. 

First, you’ll want to consider the associated tax obligations and liabilities for these assets, particularly businesses, real estate, investments, and retirement funds.

Second, different laws govern the division of specific types of assets. For instance, retirement funds are often subject to ERISA (Employee Retirement Income Security Act) regulations. 

Third, valuing complex assets can be an involved process, requiring the knowledge of specialized professionals such as appraisers, accountants, and financial analysts. For example, if you have a pension to divide but there is a premarital or post-Compliant component to the plan, you may need the assistance of an actuary or an attorney experienced in these asset types to achieve the best possible results. 

Disclosures, complex assets, and divorce

In addition to understanding tax obligations and legal implications, it’s crucial for mediators and legal and financial professionals to have all the information possible about assets. 

However, in a high-conflict divorce or if parties aren’t being truthful, high-value assets may sometimes be hidden or undisclosed. In these cases, a forensic accountant may need to investigate to ensure a fair division of assets.

Dividing complex assets can also be emotionally challenging for both parties. These assets may hold significant sentimental value or represent years of hard work and sacrifice. It’s essential to approach the process with empathy and understanding while also ensuring that all legal and financial considerations are taken into account.

How does mediation work to divide complex assets?

When it comes to dividing assets, mediators play a crucial role in facilitating a constructive conversation between high-net-worth divorcing couples. Together with both parties and their legal counsel, they explore the value of shared assets and debts, taking into account each person’s financial needs, the worth of their individual assets, and their overall financial situation.

In New Jersey, the divorce mediation process related to asset division involves several critical steps:

1. Information gathering: Both parties provide relevant financial documents such as income statements, bank statements, and property valuations.

2. Identifying and categorizing assets and debts: The mediator helps the couple identify and categorize all marital and separate properties and debts. Marital assets include all property acquired during the marriage, while separate assets are those each party brought into the marriage.

3. Valuation of assets: Once identified, the couple, with professional assistance if required, will determine the current market value of each marital asset.

4. Negotiation: The mediator facilitates discussions, enabling the couple to negotiate and agree upon a fair distribution of the marital assets and debts.

5. Drafting the property settlement agreement: Once the allocation is agreed upon, the mediator will draft a Property Settlement Agreement, which will be reviewed by each party’s attorney, if they have one.

6. Finalizing the agreement: If both parties are satisfied with the agreement, it will be signed and submitted to the court for approval as part of the final divorce judgment.

It’s important to remember that every situation is unique, and this is a general outline of the process. 

Protecting your interests: legal counsel in mediation

In divorce mediation, safeguarding your interests is absolutely crucial. That’s why hiring an experienced divorce lawyer makes sense. 

The right attorney can help you understand your rights and approach negotiation with strategies to protect your financial well-being and advocate for truly equitable outcomes, potentially saving you from a drawn-out legal battle or an unfair division of your marital property.

Consult With an Attorney

At Dughi, Hewit & Domalewski, our family law and divorce attorneys have extensive experience helping high net-worth couples divide complex legal assets through compassionate, confidential mediation and providing robust advocacy and defense during the litigation process. Our team includes attorneys who have completed the extensive training required to be court-approved family-court mediators. 

Using our in-depth understanding of the New Jersey legal system, we will help you find a path to divorce that works for you. Even when there are disputes over complex financial assets, it’s possible to arrive at an amicable resolution that protects your interests.

If you and your spouse have decided to utilize the service of a mediator to assist in dividing your complex financial assets, you can schedule an initial mediation session with one of our skilled family law mediators. Schedule your consultation with our team