Divorce advice for billionaires and high net worth individuals – part four: Mediation vs. Litigation

Divorce mediation is an alternative to litigation and for many billionaires and high net worth individuals, mediation just makes a whole lot of sense. Why have an embarrassing public circus like multi-millionaire (or billionaire?) Peter Brant and and his voluptuous Victoria’s Secret model wife Stephanie Seymour (by the way, they called off their divorce today to the shock of everyone). Peter and Stephanie should have tried mediation instead of sinking to the Valley of the Urine Receptacles the way they did, only to make up again. Divorce can be achieved without all that trashy behavior, but not if you go the litigation route. Billionaire John Kluge knew that when he divorced his wife Patricia in the 1990s. That was not a litigation situation. Why can’t more high net worth people do it like the Kluges? Patricia Kluge got $1.6 million per week in her settlement from John, but it was totally not a circus. No one ever knew anything about her popping pills, or the temperature of her urine, or anything.
It’s called taking the high road. Mediation allows you to do that in a way that using the litigation model cannot. At all costs, rich people should avoid the spectacle of a divorce trial. At the same time, don’t try a DIY divorce if you don’t know what you are doing like Edra and Tim Blixseth. If mediation fails, then you definitely want to use the litigation model rather than attempt to do it yourself and mess everything up. But if you can eschew litigation eschew it.
Other billionaires who managed to have a classy divorce (more than likely because they had settlement-minded lawyers working behind the scenes to mediate the thing), are Steve and Elaine Wynn, Ted Turner and Jane Fonda, and even Tiger Woods (the World’s first billionaire sports star according to Forbes) and his wife Elin Woods.
Mediation allows divorcing billionaires to keep the details of their divorce private and to keep sensitive documents out of the press, and to keep these sealed from the prying eyes of the public. It also makes it easier to enforce a gag order if it’s not on the five o’clock news and Entertainment Tonight each night. Litigation would obviously have the opposite result. It is prudent that high net worth individuals hire a settlement-minded divorce lawyer from the beginning of the process, and one who is also slow to provide regular sound bites about the divorce to the press.
Individuals with nine-ten figure estates (billionaires and other high networth individuals) should also be concerned with where the divorce is filed, just in case mediation attempts break down and you are forced to escalate to litigation. Jurisdiction matters. Some jurisdictions are better for the monied spouse and others are good for the spouse who wants and needs the alimony. Far better for the monied spouse if the divorce is filed in New York or Massachusetts and even Connecticut, than, say, California – a community property scheme.
Some countries are also more desirable than others. The United Kingdom, for example, is known as the Divorce Capital of the World and that has to do with the big money payouts that trophy wives of high net worth men (sorry, it’s still usually the wives who are going for the alimony) win in a divorce. In UK, the situation is particularly perilous because prenups and post-nups even though properly executed and authenticated, are presumptively unenforceable. The EU have moved to make selecting a jurisdiction easier amongst its citizens but for the most part, it is probably more advantageous when dealing with multi-national citizens, to try to file in a U.S. jurisdiction if at all possible. Too late for billionaire Dmitri Rybolovlev whose wife is suing him for divorce in Switzerland while banging him with court orders to freeze assets, even those located on United States soil.
One way for billionaires to protect themselves from a divorce filing in an unfavorable jurisdiction is to execute a prenup or a post-nup that articulates which country, state or county shall have jurisdiction (this assumes, of course, that the couple has residences in more than one state, as the laws of most states dictate that the divorce case shall be filed in a county that either the defendant or the plaintiff in a divorce action reside).
Read part one: Get a prenup
Read Part two: Get a Postnup
Read Part three: How to deal with business assets
Coming up next, Taxes & Child Custody issues