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To See or Not to See: Discovery in Mediation

Rachel Alexander Aug. 21, 2019

{6 minutes to read}  In divorce mediation, there are some things that must never be cloaked in mystery or veiled by the fog of uncertainty. Certain matters require absolute transparency, established by a comprehensive, honest sharing of data. In litigation, this is called Discovery.

In mediation, full disclosure of all relevant facts is also required. Although mediation affords a more relaxed procedure, this should not be confused with relaxed standards. In litigation, information is divulged using mechanisms including interrogatories; notices to produce [documentation]; exchange of Case Information Statements (NJ) or Statements of Net Worth (NY); answers to interrogatories; depositions; and subpoenas, if needed.

In mediation, the cooperation of the parties enables a more affordable, efficient process. It is a friendly discovery process, where clients and mediator together pour over numbers, work through budgets, draw shared conclusions and examine possibilities.

All information must be vetted in divorce. Mediation is not a shelter for those seeking to hide assets or other financial facts. Information will be uncovered — this is a foregone conclusion. The choice is how and at what cost

  • Why do I have to show my spouse such and such? Why do we have to look at this?” 

  • “I had this before the marriage, so why do I need to mention it?

  • Why do we need to disclose everything if we already agreed to terms?

For one thing, how can an agreement hold if it’s based upon an incomplete sharing of relevant facts? If insufficient data is shared, both parties are disadvantaged. Why? Because the agreement is vulnerable to future dispute and litigation. If the agreement is later found to be faulty, the finality and protection it provided can be degraded. 

Conversely, an agreement entered into by two fully informed parties, both well acquainted with the facts upon which they are relying, has a greater chance of being adhered to overtime. 

Disclosing does not equate to distributing. Certain assets are exempt from the marital estate. Acknowledging these assets upfront can actually help protect them. Sharing information helps create an environment of good faith, from which a fair agreement grows.

In addition, sometimes even separate property has to be considered in order to establish an accurate picture of the parties’ circumstances. 

For example, let’s take the Millers. The Wife earns $100,000 per year, the Husband earns $30,000. If we look no further, we might automatically start calculating alimony. But, what if this tidbit enters the frame: the Husband owns an inherited (i.e. non-marital) commercial property valued at $500 million. This is an important detail! Whether or not the property earns income, its existence could indicate he has a potential for liquidating assets or benefiting from a future income stream — facts that are integral to drawing a whole and accurate financial picture. There can be no equitable distribution or fair agreement without all the facts.

Common reasons why people are reluctant to reveal:

  • The asset will be automatically subject to division. 

  • The appraised value will be a gross distortion from the actual value. 

  • An equitable division will require an unwanted solution, like co-owning a business post-divorce.

Uncommon reasons people are encouraged to disclose:

  • Often one spouse has driven the financial aspects of the marriage, while the other has taken the back seat. The “backseat” spouse, who has often felt in financial darkness, has a great opportunity during discovery. Discovery provides a procedure to get acquainted with the marital finances. This is often first more about getting educated, grounded and empowered around money than how the money will be distributed. With the help of a professional and the containment of a process, the less financially savvy spouse can begin to climb to level ground. As he or she will ultimately need to function more autonomously, not only for his or her own benefit but for the functionality of the family, it is worth investing time in this aspect of the mediation.

  • Post-divorce couples will continue to have financial interactions. These may include paying/receiving support, dividing assets that hadn’t matured by the time of the divorce, apportioning children’s medical expenses, and so on. Those spouses committed to building a balanced, open, informed dialogue around money are likely to alleviate stress from their future encounters around finance. In fact, they are generally likely to mitigate stress in their futures!

Transparency and trust are a big ask for couples engaged in divorce. The lack of one or the other often contributes to the reason the couple is seeking a divorce in the first place. When the future mandates further financial cooperation, discovery can provide a valuable opportunity for parties to recalibrate their roles with the finances, and potentially heal from some of the fissures that occurred during the marriage. The process can chart a new way forward.

You don’t have to trust the other person. You can trust the mediation process.