Preserving a Business Through Divorce

Preserving a Business Through DivorceThe traditional divorce process is often unavoidably adversarial. It is difficult for spouses to go through the divorce process without experiencing often extreme emotional, mental, physical, and financial strain. Even in a divorce process where spouses can agree on many of the factors that arise during litigation, the toll of a divorce can be devastating on the relationship between former spouses. This is especially true in situations where spouses are not only married, but have also built their own business together. The Florida legislature recently passed legislation signed into law by Governor Rick Scott that recognizes a new alternative to the traditional litigation involved in divorce proceedings. This new alternative is known as the Collaborative Process.

While courts have encouraged spouses to work collaboratively on the terms of a divorce for quite some time and have encouraged other types of litigants to pursue options such as mediation so as to help relieve the well-known strain on the American judicial system, Florida law HB 967 formally recognizes the Collaborative Process as an alternative to traditional litigation, according to an article from the South Florida Business Journal.

The Collaborative Process

Effective July 1, 2016, this new law shifts the focus from an adversarial approach to divorce to an approach where both spouses work together on divorce-related issues. Many aspects of this approach help reduce the emotional and financial costs of divorce because they remove the need for each individual spouse to try and prove specifics of the case. Instead, the spouses work together throughout the divorce process with unbiased intermediaries, saving spouses a great deal of time and financial investment. This approach is designed to allow participants to place more emphasis on solving problems together instead of engaging in conflict. Entering the Collaborative Process is voluntary, with each spouse retaining the right to leave the process at any time with the understanding that neither of the attorneys that participated in the Collaborative Process are allowed to represent either spouse during subsequent traditional litigation.

While one of the goals of the Collaborative Process is to promote efficiency, it is important that spouses who choose to enter the process are aware that they will likely not be able to solve every issue at the first meeting in the process. There are still a number of considerations that must be weighed and looked into throughout the process, especially when spouses own a business together.

The Collaborative Process: Business Records

For instance, as the article points out, the Collaborative Process allows spouses to keep business records private. This is an important step in maintaining stability in a business regardless of the ownership arrangement in place because spouses use one team of accountants instead of individual teams for each spouse. In keeping such records private, disruption to the business from investigation into business records is minimized. Minimizing the disruption may help keep the business running during the divorce process and after. An unbiased third party that has completed an assessment of the spouses’ financial situation will then present such information to the spouses, who will decide how to approach those findings instead of allowing a judge decide how those findings should be approached.

Using a single team of people to conduct such assessments also avoids the risk of redundant efforts by individuals hired by each side, as would likely be the case in traditional divorce litigation. Additionally, by keeping business records private, personal and business-related finances do not become a matter of public knowledge. The Collaborative Process therefore offers spouses a more private avenue to divorce instead of allowing litigation to expose the financial status of the individual or business. If spouses own a business together, they can retain the power to determine how to divide related assets and how to move forward with finances, without the involvement of a judge that may dictate a different arrangement between them. This empowers business owners to retain control of their business, and can help nurture a stronger working relationship between spouses after a divorce has been finalized should they wish to retain control of their portion of a given business post-divorce. In this way, a business and its finances can remain far more stable than if litigation came into play and put a jointly-owned business at risk.

The Collaborative Process: Emotional and Mental Health

In addition to hiring a shared financial analyst, the Collaborative Process calls for there to be an unbiased mental health professional to help facilitate the handling of emotional issues that arise throughout the divorce process. This mental health professional is also available to help spouses parent effectively during the divorce process. The presence of mental health professionals to work with couples together or on an individual basis is important in a process where the actual emotional toll taken can be underestimated until a person is actually engaged in it.

Legal Assistance in Divorce

There is no one single process for divorce that will work for everyone. The Collaborative Process is not likely to be a successful option in situations where spouses cannot communicate effectively or are dishonest with each other. However, when you and your spouse have jointly decided on divorce and still retain the ability to communicate effectively, the Collaborative Process might be right for you. This is especially true if you and your spouse own a small business together and wish to preserve that business.

No matter which process you choose, divorce will never be an easy process. While the Collaborative Process focuses on solving issues amicably, it is important to understand that it will still require a great deal of effort and work. You will still be responsible for acting in good faith to provide information requested by the professionals you work with throughout the process, and for adhering to any agreements made throughout the process. While there will still be a financial cost for engaging in the Collaborative Process, the idea behind the process is to minimize such costs and increase the efficiency of the process.

If you have made the difficult choice to consider or pursue divorce, it is important that you find legal assistance from a family law attorney with experience in different types of divorce. Scott J. Stadler has worked with many clients at all stages of the divorce process and uses that experience to take an individual approach with each client. If you have questions about the different pathways for divorce, or concerns related to how divorce might affect you, contact Scott J. Stadler to schedule a consultation.