The recent divorces of billionaire couples Bill and Melinda Gates and Jeff and Mackenzie Bezos have demonstrated the importance of alternative methods of dispute resolution to avoid engaging in drawn out and acrimonious court proceedings.
In both the Gates and Bezos divorces, mediation and collaborative practices have been employed to reach a property settlement. The Financial Review has reported that Bill and Melinda Gates began the process of negotiating the division of their $184 billion fortune more than a year before the announcement of the divorce. Similarly, Jeff and Mackenzie Bezos’ use of out of court settlement methods like mediation ensured that they retained control over the division of the substantial asset pool.
Mediation is an informal dispute settlement process managed by a trained third party referred to as a mediator. Apart from being cost effective, a key incentive of mediation is that the parties are enabled to reach an agreement in a private setting without recourse to the courts. Although any settlement reached at mediation is not automatically binding, the discussions that take place cannot be used against either party in subsequent proceedings.
This level of control can be hugely beneficial for high net worth couples who would rather the intricacies of their financial structures be dealt with through private arrangements rather than by court orders. Further, by avoiding the conflict and emotional trauma which is often generated by adversarial court proceedings, high net worth couples can reach a property settlement while still preserving some aspects of their personal relationship. Maintaining working relationships and mutual involvement in charitable foundations even after relationship breakdown are desirable outcomes.
A further option available to high net worth couples who wish to avoid court proceedings is to enter into a Binding Financial Agreement (‘BFA’) with respect to the division of property between them. A BFA, commonly referred to as a “prenup”, is a binding agreement between parties which sets out the way that some or all of the parties’ assets will be dealt with in the event of a relationship breakdown. When properly drafted, BFAs operate to avoid the jurisdiction of the Family Court in making Orders regarding the assets involved in that agreement.
In complex property matters, BFAs take into account the existing financial entities of the parties and deal with the overall division of the asset pool. This level of asset protection allows high net worth couples who have built up a profitable business together to ensure that the business remains within the family. Further, BFAs operate to guarantee that inheritances are distributed in accordance with the directions of the parties and are not simply treated as part of the overall property settlement.
There are strict technical requirements for BFAs to be valid and enforceable, including a requirement that each party to the relationship obtain independent legal advice. Nicholes Family Lawyers has expertise in preparing BFAs and providing the requisite advice to clients. We are also experienced in mediating complex property settlements and we employ trained mediators who can guide clients through this dispute resolution process.
However, we understand that not every matter can be dealt with through mediation and that BFAs will not be appropriate in every situation. Nicholes Family Lawyers has extensive experience in litigating high profile property settlements and has the skill and professional expertise required to secure an advantageous outcome should matters proceed to court.