When facing the possibility of a divorce, many business owners are often concerned that this major life event will hurt their financial well-being. Will the business they worked so hard to develop be harmed? Will there need to be a valuation of the business or a buyout of the other spouse’s interest with other assets aside from the business? For business owners going through or contemplating a divorce, mediation or a collaborative divorce can be the best option.
Collaborative Divorce/Mediation Provides Privacy
Business owners may prefer to keep their financial information out of the hands of competitors and just generally want to keep things private. In traditional litigation, a lot of this information can become public, especially if there is a hearing involved. This may include disclosure of a profit and loss statement, income, and expense declarations, possibly a K-1 partnership form with the IRS, Schedule C, etc. Since court hearings are public, anyone can attend. Throughout the pandemic, most courts have utilized Zoom for certain types of court hearings, which are usually broadcast on YouTube.
In a Collaborative Divorce or Mediation, all financial documents are kept private between the couple and professionals assisting them. Financial documents are not filed with the court and there is no public hearing concerning the financial division of the business.
Collaborative Divorce /Mediation Provides More Options with Expert Guidance
In traditional litigation, settlement options are limited by the law. In Collaborative Divorce and Mediation, there are more options, and the couple can explore more creative and innovative solutions with professionals who tend to be “outside the box” thinkers. It all depends on the needs of the business and the agreement the spouses can reach.
A neutral financial professional is part of the collaborative team and helps to guide the spouses to make the best agreement possible that will preserve the business as well as meet their daily and future financial needs. The financial professional will help them to gather and organize their financial documents so they can decide what the next steps should be, both short term and long term, for the business.
The couple might also hire a financial expert to perform a business valuation. That valuation is shared, thus making the process transparent and confidential. Again, none of this information is filed with the court.
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The Law Office of Rebecca Medina can help and support business owners facing divorce by utilizing the Collaborative Divorce process or Mediation. Contact us to schedule a consultation and learn more about how we can help you with any aspect of your divorce.