Saturday, July 21, 2012

Seven Questions I Ask Clients When Mediating Estate And Family Property Conflicts

I have noticed an increase in the number of estates, trusts, and probate-related disputes over the last few years. Part of the increase may be our aging baby boomer population and part of it may be due to the economic downturn. In some of our cases, we use mediation to resolve these disputes -- entire cases or isolated issues. 

For example, in cases in which a residence is the sole or primary asset, mediation with regard to a possible expedited sale of the house with the proceeds to be put in escrow pending resolution of the lawsuit can benefit the parties since empty houses deteriorate rapidly and are difficult to insure. Such a sale can also serve as a reality check for the parties who may be improperly estimating the fair market value of the house. 

Why is mediation used even when each side is sure that he or she is absolutely right or the opposing party seems impossible? Here are 5 reasons: First, it can help save litigation expenses and prevent the estate from being dissipated by legal fees. Due to court cutbacks, it takes longer to obtain hearings and cases can last for years. Second, it maintains our clients' confidentiality and keeps fights out of the public eye. In litigation, court filings are public where mediation can allow the records to be confidential. Third, it can preserve family relationships or prevent family relationships from deteriorating further.Mediation can address underlying family conflicts and take into account emotions and family dynamics in considering legal obligations and rights. 

Fourth, it allows us to obtain certainty and ensure tax savings which may not happen in litigation when a judge is deciding the case. Fifth, it allows us to use creative solutions that may not be typical legal remedies that a court can apply. In mediation we can air and acknowledge complicated emotional issues that were preventing early settlement and we can develop flexible solutions to accommodate different interests. 

Here are some questions I ask clients when we are considering mediation. This is based on cases where we have agreed to mediate conflicts in order to preserve family wealth and promote family relationships. 

  • Is the conflict ripe for mediation and are the parties motivated? Mediation should occur when planning and decision making cannot continue because of unresolved conflict and the parties understand that opportunities are being lost or extra expenses and legal fees are being incurred. Mediation usually happens after we have hit a wall in the settlement process where having an experienced third party mediator can make a difference. Mediation can occur before, during, or after court proceedings.
  • What are the goals for mediation? I help clients identify the goals in specific terms. Do you want the best possible monetary outcome, family peace, specific property, preservation of assets or other goals? 
  • Who should participate in the mediation?  Probate cases usually involve a high degree of emotionality and numerous parties. There may be multiple decision makers (spouses, children, advisors, and significant others). If someone can veto the agreement or is necessary for it to work, consider whether that person should be at the mediation.
  • Are you and the lawyers prepared?  Thorough preparation is often the key to success. It is important to have researched the underlying facts and the law with respect to the outstanding issues before going to mediation. Sometimes the key to successful resolution may lie in creative use of the tax laws. I also spend time identifying the strengths and weaknesses of both sides' positions. I usually prepare a confidential Settlement Brief providing the mediator with necessary information and background information. I will also highlight my clients' strengths and give the mediator the other sides' weaknesses. I summarize the history of prior settlement attempts and offers. I often provide the mediator with copies of relevant cases and/or statutes. Sometimes I will present expert or financial reports to help the mediator understand the issues. 
  • Who should be the mediator? Mediators have different styles and approaches. Will the parties respect a former probate judge? Do the personalities and situation require an authoritative mediator to evaluates alternatives and suggests outcomes? Or would the parties respond better to a more facilitative mediator who helps the parties work out their own agreement?
  • Do we have a negotiation plan? In order to be assured of getting what my client wants most, I help prioritize my client's interests, prepare a general strategy and consider which concessions might help achieve the identified goals. It sometimes takes more than 1 session to reach agreements and my client needs to be prepared to be patient and keep emotions in check and not simply issue ultimatums. Some mediations are marathons and not sprints. 
  • Can we bring our proposed settlement agreement to the mediation? If I have cases where clients know what specific wording or stipulations are needed, I will bring a draft agreement, release or settlement on a memory device or laptop to the mediation to be revised as needed. Careful drafting is required for a mediated agreement to be enforceable and it is best to obtain the signatures the day of the mediation to avoid future disputes or someone changing their mind. 
Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221. The firm website is www.moravecslaw.com

The firm has two offices and consultations and meetings can be held at either office. There is ample free parking adjacent to the firm's offices.

The San Gabriel Valley office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.
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