Disclosure is Not Optional

May 3, 2017

{3:36 minutes to read} I recently attended a panel discussion on how to determine income in a matrimonial mediation. The panel consisted of a litigator, a mediator and a financial professional. The idea was to show the different approaches each would take in cases where income was hard to determine, such as self-employed parties, cash income, other complicated financial situations, or when a party just refuses to disclose relevant information. That got me to thinking about disclosure in general and how it can evolve in mediation.

When a Financial Person is Needed

Even if someone isn’t actively trying to evade financial disclosure, there are some situations where the parties and the mediator need help in going through vast, complicated financial documents to determine a party’s actual income. In those cases, working with a financial neutral, preferably one who has been trained in mediation, is vital to help everyone understand that 50-page income tax return and complex financial statements.

Does It Matter How It’s Done?

Mediators may all have different processes as to how their clients disclose assets and income. I use a software program while others may just have their clients write down their information. But no matter what method we use, the documentation and information that we all seek is the same.

There needs to be full disclosure of both parties’ financial situations in order for clients to make the best decisions they can. A party may choose to waive the sharing of an asset, but only if they have a full understanding of that asset.

Mediation cannot be a way for a party to circumvent disclosure and take advantage of the other spouse. At the initial consultation and in the agreement to mediate, I review with clients the disclosure process and requirements. I also explain why it’s important, and that if a party refuses to disclose fully, mediation would not be appropriate.

Some Clients Need to Go to Court

The litigator explained that when confronted with a spouse who refuses to provide full disclosure, the court rules require that each produce all documents that would help to demonstrate reality. A party that fails to disclose all requested materials and documents would be subject to sanctions.

Once the documents are produced, the litigator would then review those documents completely, use financial professionals and others as necessary, conduct an extensive deposition, and then usually require production of additional documents as needed for her exhaustive review. This was not a waste of fees and time but rather the only way for her client to receive her fair share of marital assets and support when faced with a spouse not playing by the rules.

Disclosure in mediation is voluntary in the sense that there are no subpoenas or court rulings. However, full disclosure is necessary in order to assure a comprehensive mediation and satisfactory outcome.

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