When one or both parties own a business it can lead to a particularly complicated divorce proceeding. Not only will the parties have to resolve any conflicts regarding income and support payments but they will also have to sort out what, if any, percentage of the business belongs to each party. The court is more likely to see the business as distinctly separate property when: (1) one party acquired the business before the marriage; (2) has not commingled any business and personal funds; and (3) has kept detailed and consistent financial records that allow expenditures to be easily traced to the source of income. However, even in this situation Georgia courts will still consider other factors including: the duration of the marriage, the standard of living the couple has enjoyed, and the efforts of both parties towards the marriage partnership.
Valuation of the Business
The business needs to be immediately evaluated by a neutral professional such as a forensic accountant to properly determine the value. The business owning spouse will likely attempt to devalue the businesses assets, clients, cash flow, goodwill, and potential for economic growth. If an evaluation is not performed, potential claims to alimony, equitable division of the operation, and other assets, may be lost or waived. A forensic accountant will have the ability to acquire all necessary documents from the business and may submit and affidavit to ensure that the business is equitably settled at trial. Most attorneys work closely with a trusted forensic accountant.
How does a Partnership or Joint Venture Affect My Divorce?
If one spouse is involved in a partnership owns a percentage of a business, it may still be considered marital property. The forensic accountant will determine the spouse’s interest in the partnership. In some cases a business partner will be reluctant to hand over their personal business documents when they are a non- party to the divorce case. An attorney may subpoena all relevant documents if one partner becomes uncooperative.
Dependence on Spouses Income from the Business
If one spouse is dependent on the other business-owning spouse, this can be a source of concern during an impending divorce. When one spouse is a homemaker or does not work, this spouse may be fearful of divorce because he or she is unsure of how to generate income. In these cases, it is very important that the non-working spouse be able to prove how their efforts contributed to the marriage. For example, when a homemaker cares for the children, cleans the home, and runs errands such as grocery shopping and banking, the homemaker’s contributions to the marriage likely equal that of the working spouse. A court will view the homemaker’s efforts as making it possible for the working spouse to be away and devote time to his career and earning income.
Will Litigation be Necessary?
Divorces can often settled through mediation without ever going to trial. Most Georgia counties require the couple to try to mediate before going to trial. Typically, the more assets a couple has, the more likely they will be unable to reach an agreement in mediation. In cases where a business is at stake, the parties may feel particularly passionate. Mediation is beneficial because the parties have control over what they consent to in the agreement. When one party is overly emotional or adversarial, it may sabotage the mediation process. Once the case enters litigation, the parties no longer have control of their fate and it will be up to the judge to decide how to divide the assets. Few people would feel comfortable leaving the fate of their business in a judge’s hands. It is advisable that the parties compromise to come to an agreement they can both live with during the mediation process.
How Long Will the Divorce Process Take?
The length of your divorce case is dependent on a variety of factors that should be discussed with your attorney. Realistically a divorce process may take anywhere from a couple of months to a few years. A case will generally take longer if it is contested, involves complex issues, or involves disputes about minor children. Some states require a waiting period between the Lastly, the state guidelines for residence establishment may also determine the length of your divorce case. Your attorney may give you a relative guideline of how long your particular divorce case may take – however this is an estimate and if the facts of your case evolve into more complex issues then your case may take longer than previously estimated.
How Much Will this Cost?
Overall attorney’s fees will generally be more costly for cases that involve a business because these cases are more complicated than the average divorce proceeding. Attorney’s fees can be discussed during the initial consultation. A forensic accountant will be invaluable in cases where a business is at stake but will present an added cost. This can also be discussed with the attorney during consultation. An attorney who normally works with a forensic accountant should be able to give a fairly accurate estimate of the cost. In some cases, it may be necessary to involve investigators or experts in the process. Give your attorney the full details of the case and bring all relevant documents to the consultation. It is easier for an attorney to keep costs down when all of the information is presented up front. Surprises during the process mean more time will have to be spent on the case that leads to added costs. Ultimately, the cost of a divorce depends on the parties and not on the attorneys. When the parties are willing to cooperate, costs are kept at a minimum.
If you are facing divorce and your spouse or you own a business or is a professional, call us at 770-609-1247 to discuss how one of our experienced divorce attorneys can assist you.