Dividing Complex Marital Assets in Mediation

By | March 20, 2011

Mediation involves a certain degree of trust between the parties. They have to have confidence in the fact that each party is laying all of their cards on the table and is complying with the financial disclosure requirements of Family Code 2104 and of course their fiduciary obligations under Feldman. In the case of complex assets, such as a community property (or mixed property) business, it is often difficult to establish an accurate value. One party may be in charge of the business and know the operations intimately while the other party may not be involved and would not be in a position to evaluate the accuracy of any value placed upon the business by the “in” spouse. A party may not be intentionally misleading the other, but simply not be technically able to give an accurate value. It is generally pointless for the parties to just “throw out” numbers and hope to agree. In these situations, it is advisable to retain the services of an expert, such as a CPA to value the community portion of the business (and generally it is not done by the accountant who is on payroll). In this way the parties do not need to rely on each other’s representations of value, but rather those of the (neutral) third party to get an accurate measure of value and cash flow. This information will help them to settle issues of community property division and support with eyes wide open.

Mediation is often conducted just between the parties and their mediator, but in situations like the above, sometimes the accountant can join the mediation sessions as an informational resource to give the parties a valuation report and be available to answer questions. Mediation at this point may resemble collaborative law, but it differs in that the parties are agreeing to retain one expert and each party does not have a separate expert.

Some practitioners argue that division of complex assets is better left to litigation, but with the right resources (i.e., experts) even resolution of a complex matter can be accomplished through mediation.