The recent separations 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 separations, 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 the $184 billion fortune more than a year before the official announcement of their separation. 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 able 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 took 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 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 their personal relationship. This will assist the parties to maintain working relationships and mutual involvement in charitable foundations even after the property settlement has been finalised.
A further option available to high net worth couples who wish to avoid commencing 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 oust the jurisdiction of the Family Court to make an Order regarding the assets referred to in that agreement.
In complex property matters, BFAs will wrap around the existing financial structures of the parties and deal with the overall division of the asset pool. This level of asset protection will allow for 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.
It must be noted that 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 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 vast 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.