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You are here: Home / Blog / The Benefits of Collaborative Divorce for Small Business Owners

The Benefits of Collaborative Divorce for Small Business Owners

September 23, 2019 By Bart Carey

Divorcing spouses who own a business have an option for a goal-oriented, amicable process: Collaborative Divorce.

This process promotes cooperation and partnership instead of a public and potentially destructive litigation procedure.  It provides solutions for the couple and the business that aren’t available if the courts become involved.

Collaborative Divorce Is a Shared Business-Planning Process

Collaborative Divorce is goal-oriented.  The divorcing couple can sit down and talk about how their business goals have changed from when they were married to what they are now.  What do they hope to see in the future?  They can approach this change together and work as a team for the best interests of the business, rather than trying to destroy one another – and the business in the process.

Instead of looking at the business as a fixed pie asset that’s going to be chopped up, collaborative divorce clients can discuss how they’d like to move forward, and perform some strategic planning about the kinds of outcomes they both want to see long-term, years after the divorce is final.

In the litigation style of divorce, business owners can be ordered to turn over records and other documents.  In the collaborative process, by having an expert financial professional on board, the most important elements of the business can stay in place.  The goals are analyzed, and the neutral professional will provide helpful and different ideas about creating a path to get there.  That’s the opposite of the forensic nature in a litigation divorce procedure.  It’s far more beneficial and less draining for both parties.

Maintaining Business as Usual

One of the great fears small business owners have when they’re facing divorce is that the process is going to kill the goose that lays the golden eggs.  Their businesses are their income; it floats their lifestyle.  Business owners are afraid their years of hard work are going to be ruined by the divorce.  If they have partners, so are their partners.  Partners have little control over the impacts of their other partner’s divorces but their other partner’s divorces have potentially high stakes impacts for them.

In a litigation style divorce, that can happen because the court is stepping in and making orders about what the owners can and can’t do in their business and what records will be turned over.  The process can easily drag on for years.  It can make orders to turn over payroll and other documents to putting receivers in the business.

But in a collaborative divorce, the business owners can keep operating.  They can do business as usual.  Partners can be assured intrusions will be minimal and their information will remain private.

Strategic Planning and Offsetting Spousal Support

In a collaborative divorce, our team brings in a neutral financial professional who is able to help both sides understand what the options are for the business – somebody who truly understands how to crunch the numbers.  It’s not “my financials” versus “your financials”.  We don’t dig through all the books and create reports that are agenda driven.  It is a straight look from a trustworthy source at the economic health and cash flow of the business.

When both parties have sufficient income, spousal support is less of an issue of contention.  Working together, the clients and our team will find solutions that allow continuing investment or co-ownership in a profitable business by both spouses.  It can create streams of income that can replace spousal support, resulting in better relations and independence for both.

The Benefits of Privacy in a Collaborative Divorce

Learn from the case of Frank and Jamie McCourt, who formerly owned the Los Angeles Dodgers.  I will never forget the McCourt’s’ divorce.

The McCourt’s’ financials and everything relating to how they handled their ownership of the Dodgers wound up in the news and sports pages because their court battle was public record.  It turned public sentiment and the National League leadership against them.  Accusations flew back and forth on fiduciary duty breaches, and tax issues came up.  The league office came down on the business, and they ended up having to sell the team.

But in a private divorce process, we can contain those issues and keep them confidential.  We are able to deal with them in a reasonable way which benefits both parties.  If the business needs to restructure in order for the divorce procedure to go forward, a collaborative process makes this possible.

Working in a private collaborative divorce keeps private and confidential all sensitive business information that must be disclosed for transparency.  Clients don’t have to worry about competitors or the media obtaining such information.

Options for Pursuing a Collaborative Divorce

When a couple determines that a divorce is inevitable, both spouses should research all the divorce possibilities available in their state.  That will determine the length and cost of the process, as well as all its possible outcomes.  Understanding and matching that with the goals and interests of both spouses is the most important first step they can take.  Both parties should fully understand these options.  The State of California offers many different tools in this respect.  One of the best is called Divorce Options.  It’s a workshop offered statewide through all the local collaborative groups.  Divorcing couples will receive a presentation explaining the basic four options for going through a divorce.  Information on the times and places of Divorce Options is available either through local organizations or the statewide website, www.collaborativedivorcecalifornia.com/find-a-divorce-options-class/

Want to Read More?

Three Ways Collaborative Divorce Can Save You Time and Money
The 7 Habits of Highly Effective Clients in Divorce
How To Choose a Divorce Lawyer.

Filed Under: Blog, Collaborative Divorce Tagged With: Business Owners, Collaborative Divorce

About Bart Carey

Bart Carey has practiced Family Law for over 30 years helping clients in Collaborative Divorce to de-escalate tensions and find reasonable, fair and peaceful resolutions.
Bart's Profile | Bart's Website

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