In no small sense every divorce matter is also a tax matter. Without considering tax consequences, a divorce lawyer cannot tell the client what value he or she will be receiving from the divorce settlement or judicial determination. Routinely, divorce litigants are now referred to mediation before a court will hear the case. Sadly, most participants in mediation do not understand the process or how it differs from a trial before the court. The chart below highlights the important differences.
|OFTEN NO FINALITY: JUDGE DECIDES CASE – APPEALS ARE COMMON BECAUSE ONE SIDE FEELS RAMRODDED OR IS STILL ANGRY – DELAYS FINALITY||FINALITY MORE LIKELY: PARTIES DECIDE AND ARE INVESTED IN OUTCOME – APPEALS LESS LIKELY – FINALITY MORE ASSURED|
|PUBLIC: COURT REPORTER PRESENT AND RECORD MADE. CASH HEARD IN OPEN COURT AND RECORD IS PUBLIC UNLESS SEALED.||PRIVATE: NO PUBLIC RECORD AND GENERALLY NO COURT REPORTER. COMMUNICATIONS PRIVILEGED UNLESS EVIDENCE OF CHILD OR SPOUSAL ABUSE.|
|FORMAL: RULES OF EVIDENCE APPLY – DEFINE WHO CAN AND CANNOT SPEAK, WHAT MAY BE SAID, WHEN AND WHAT AND HOW DOCUMENTS MAY BE USED.||INFORMAL: RULES ARE FLEXILBE – MAINLY COURTESY AND CIVILITY.|
|NO CAUCUSES: NO EX PARTE COMMUNICATIONS OR COUNSEL WITH JUDGE ARE PERMITTED. ALL WHO ARE LEGALLY ENTITLED TO BE PRESENT MAY ATTEND ALL HEARINGS.||CAUCUSSING: MEDIATOR MAY SPLIT INTO SMALLER GROUPS FOR PRIVATE MEETINGS: ONE SIDE WITH LAWYERS, LAWYERS ALONE, PARTIES ALONE (IF LAWYERS ALLOW), JUST ACCOUNTANTS OR ANY COMBINATION.|
|LESS FLEXIBILITY / SOMETIMES LESS FAIR: COURT HAS BROAD LEGAL AND EQUITABLE POWERS BUT JUDGE MAY FEEL RESTRICTED BY DESIRE NOT TO BE REVERSED AND WILL NOT KNOW FACTS AS WELL AS PARTIES.||MORE FLEXIBILITY / MORE FAIR: PARTIES KNOW FACTS INSIDE OUT AND WITH HELP OF MEDIATOR MORE OFTEN CAN CRAFT A BETTER SOLUTION TO DISOLUTION OF MARRIAGE PROBLEMS.|
|TAX ISSUES FLUMAXED: JUDGE IS NOT A TAX EXPERT AND CONFLICTING EXPERT TESTIMONY IS OFTEN CONFUSING. JUDGE MAY GET IT WRONG.||TAX ISSUES UNDERSTOOD: TAX ISSUES CAN BE DISCUSSED IN GIVE AND TAKE ATMOSPHERE WHICH PERMITS REACHING A MORE SENSIBLE AND FAIR RESULT.|
There is wisdom in the notion that settlement is preferred to risking all before a judge who is, after all, only a person who, no matter how sharp, may be off on the day he or she hears your case. The complexity of divorce tax law rules makes highly likely that tax benefits will be unfairly allocated between spouses in a decision following an adversarial proceeding subject to restrictive rules of evidence and the circus atmosphere that pervades divorce trials before many judges (especially in states where judges must face periodic re-election campaigns).
© 2012 by Robert S. Steinberg, Esquire
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