Your marriage might not have worked out, but if you co-own a business with your ex, you might be forced to figure out how to make your professional relationship work.
Keeping Divorce Out of the Family Business
It’s not uncommon for spouses to work together, or even start a business together. But adding a family business into divorce agreement negotiations can make the proceedings even more difficult.
As with all aspects of a marriage, there are specifics that will need to be handled when it comes to deciding on how you want to handle a business you co-own with your ex. Here are some considerations and options.
Option 1: Continue co-owning the business. For some people, this might not be the ideal situation. But if you can make it work and continue to run the business, this might be the best option.
If you’re able to develop a professional, co-owning business, then both partners will be able to keep their interest in the business. Additionally, the valuation of the business does not need to be determined so that it can be decided upon in the marriage. Remaining in business together of course means that you will need to remain in close contact with your ex-spouse to maintain a good working relationship. For couples that can’t see this working, the next best option may be to have one spouse buy out the other one.
Option 2: One spouse buys out the other’s half of the business. The business will be considered as another asset owned by both of you in the divorce As a result, it will be treated the same way from a legal and financial perspective. If you cannot continue working together, then the business will need to be divided in order for spouses to get their fair shares.
Step one of this process is to hire a business appraiser to perform a valuation of your company. One a value has been determined, one spouse can buy the other spouse’s half of the business, or other assets can be leveraged for an even exchange.
Option 3: Sell the business. This option might be the easiest when it comes to avoiding any potential issues. In this case, the business would be sold, and the final profits divided between spouses. Of course, this might not be the best option for a very successful business that can yield much more profit. In this case, it’s suggested that you hire an appraiser to perform a valuation of the business to determine an appropriate selling price.
Regardless of which option spouses choose, it is always advised that you work with a team of professionals, including a family law attorney, that can help you through the process.
The Divorce Process
The necessary steps for obtaining your divorce will be dependent on the particulars of your relationship, including if you have a shared business with your spouse, or if you two share any children. The dissolution of a marriage in which the parties have been married for a short period of time, have no children, and little property or debts will most likely be less involved than a divorce where the couple has been married for a long period of time, shares minor children, or where there is significant property or debt to be divided. The question of if both parties are seeking the divorce will also determine the ease at which they are granted that divorce. A partner not wanting the divorce might respond in a way that allows them to prolong the process. If a couple can both agree to the divorce the process can be much smoother and quicker. This also applies to the agreement process because if a couple is bogged down with fighting and disagreements over everything, the process will be much slower.
1. Petition for Divorce
To start the divorce process one of the spouses must file a petition. Even if both spouses are in agreement, one of them will have to file a petition with the court asking for the divorce. This petition states the grounds for the divorce. These vary from state to state. California is a no-fault state, meaning no fault is placed on either party regardless of infidelity, etc… All jurisdictions allow for some type of no-fault grounds such as “irreconcilable differences.” Some states will consider fault grounds for divorce, such as adultery or abandonment. Your family law attorney will be able to advise you on if fault grounds are available in your state, and if so, whether or not it makes sense to file for divorce on fault grounds.
2. Temporary Orders for Support and Custody
If one spouse is seeking financial support or custody of children, that spouse will need to ask the court for temporary orders for support and custody. A temporary order is usually granted within a few days of the initial petition. It remains in effect until the full divorce court hearing. If the party seeking the temporary order is the same party who is filing the petition, it’s advised that they file both the divorce petition and the temporary order at the same time. If you are not the party that filed the divorce petition but will be looking for temporary support or child support, it’s advised that you file your request for the temporary order as soon as possible.
3. Proof of Service and Response
When a party files for divorce they also need to file for a proof of service of process. This document proves that a copy of the divorce petition was given to the other party. This can be done through a process server, or by a lawyer. There are numerous ways to do this and you’ll want to consult a lawyer for advice on how to do this. If the parties mutually agree on the divorce, it is best for the party who files the complaint to arrange for service of process to the other party’s attorney.
Once the party receives the service of process they will need to file a response to the petition. In states where fault grounds can be filed and the responding party wants to dispute those grounds, he or she needs to address it in the response. They are able to dispute the facts alleged in the grounds for divorce. Additionally, if the party disagrees with property division, support, custody, or any other issue, this should be set out in the response.
When two divorcing spouses disagree on issues they must come to an agreement that settles their differences. Often times this is done through mediation. During this process every aspect of a marriage is resolved: child custody and visitation, child support, property division and any spousal support. Working with a mediation lawyer can help you receive the settlement you are seeking when it comes to dissolving your marriage. It’s within your best interest to try and resolve all these issues outside of court. This will cut down on legal fees, time spent arguing, and any headaches that can come with trying to go back and forth to find an agreeable settlement. Any issues left undecided during the mediation process will have to be decided at a trial.
5. Order of Dissolution
Once everything is decided upon an order of dissolution is set forth. This document spells out how the property and debts are to be divided, what child custody and visitation schedule is, what support payments (spousal and child) need to be paid, and any other issues. If the parties are able to negotiate their own resolution to all of the issues, their lawyers will draft the order of dissolution and submit it to the court. If the Order of Dissolution complies with legal requirements and both parties entered into it knowingly and willingly and can attest to it, then the judge approves it. This means the divorce is finalized. If these issues cannot be resolved then a couple will have to go through divorce court and have a judge decide on the aspects of the marriage dissolution. Once that is decided an Order of Dissolution is the end result of the trial.
Working with a Divorce Attorney
If you are facing a divorce, you should work with a divorce attorney that will take a vested interest in your specific situation and advise you on what you might face in a divorce regarding property division, child support and custody, and alimony. They will be able to advise you on your options. A divorce attorney will provide support and guidance as you work towards ending your marriage.
For advice on divorce, you need the expert law firm of Law Offices of Korol and Velen, Certified Family Law Specialists.