Tag Archive for: collaborative divorce

Divorcing doesn’t have to ruin the family business in Pennsylvania

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Small businesses are the heart and soul of the economy in Bucks County and throughout the rest of the country. According to the Small Business Administration, approximately 90 percent of all of the businesses in the U.S. are family owned and run. Running a small family business comes with several advantages, like more convenience, flexibility and lower employment costs. However, things can quickly get complicated when the owners of the business decide to separate and divorce.

It all starts with the prenuptial agreement

Before a couple even says “I do,” they should already be planning for their financial future with a prenuptial agreement. This document acts as an insurance policy in case divorce ever becomes part of the equation. One of the mistakes that small business owners often make is not drafting this important document until it’s too late since they previously believed that divorce would never become an option. However, according to Forbes, over 50 percent of married couples in the U.S. eventually divorce so obtaining a prenuptial agreement should be a priority for all married couples, and those that own a business together in particular.

This agreement should be in writing, provide a full disclosure of the business’ assets and liabilities, be executed by both parties and without coercion from one side and documented in a recordable format.

Making it work after the divorce is finalized

Just because a marriage is ending doesn’t mean that the business has to go down along with it. Divorced couples can still stay in business together and be successful if:

  • They are rational and consider compromise.
  • They hire an independent business appraiser as part of the divorce proceedings.
  • They consider how their roles will shift in the workplace after they are divorced.
  • The business stays relatively the same and doesn’t undergo any big changes until after the divorce is finalized.

Although it can be a daunting task to split with a partner and still maintain a business, it can be done with a little work and a lot of communication. For example, according to Businessweek, a divorced couple that owns a bakery in the Boston area worth $2.5 million has been in business together for over 35 years. The couple, who were married briefly from 1979 to 1981, found that although their marriage didn’t work they were able to keep their business going out of admiration for the each other’s business skills.

If you and your spouse are considering divorce and are concerned about the future of your family business, contact an attorney in your area that can work through these concerns and ensure that you and your spouse are able to transition smoothly from being marital partners to business partners. You should also realize that a business has value and a competent attorney can assist in ensuring that both partners get value for the efforts they contributed to the business and find ways to separate while preserving the business.

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Handling financial affairs during a Pennsylvania gray divorce

Older couples often have valuable assets, complex property and little time to change retirement plans, making fair settlements crucial in gray divorces.

The phenomenon of “gray divorce,” or divorce after age 50, has become increasingly common in the last decade. The proportion of people divorcing after 50 increased from 10 percent to 28 percent from 1990 to 2010, according to the New York Times. Today, the number of divorced people older than 50 has outstripped the number of widowed people in the same age group.

There is no denying that divorce is a complicated process at any age. However, people preparing to divorce after age 50 in Langhorne, Pennsylvania, should expect to navigate some especially challenging financial issues.

DIVIDING COMPLEX ASSETS

One issue older couples often face is the division of complex assets, according to Forbes. Older individuals have had more time to accumulate personal assets, and couples in longer-lived marriages may have built up substantial marital assets, such as homes, retirement accounts and other savings. Inheritances from parents and other relatives can complicate matters as well, as the distinction between marital and separate property can be difficult to define.

Spouses can work together to decide how assets will be divided, but usually, spouses can reach a fairer division by seeking legal guidance, since many people do not understand their rights during property division. For instance, many individuals do not realize they may be entitled to part of a spouse’s retirement accounts, including 401(k)s, pension plans or IRAs, if contributions were made to those accounts during the marriage.

Many assets can be divided by agreement or court order, but some assets cannot be distributed this way. For example, retirement plans can only be divided with a Qualified Domestic Relations Order. It is beneficial for older couples to seek legal help when they divorce, to ensure that a fair settlement is awarded and that all court orders and documents are in order. Otherwise, spouses run the risk of losing financial solvency following the separation.

PLANNING FOR RETIREMENT

Another significant issue with divorcing later in life is that both spouses are near retirement, leaving little time to rebuild savings. Typically, even people who were on track to enjoy a comfortable retirement together may not have enough saved to fund two retirements. Separate retirements can cost 30 to 50 percent more than retiring as a couple would, according to USA Today.

Couples should remember that expenses associated with everything from housing to travel to in-home assistance double after a divorce. In light of these increases, many couples ultimately must choose between three options:

  • Staying in the workforce and postponing retirement.
  • Re-entering the workforce.
  • Retiring on track, but with significantly different expectations.

Individuals facing these issues can benefit from hiring a financial advisor before the divorce is complete, so they can realistically evaluate what they will need to survive independently. The sooner spouses evaluate their financial needs, the better they will be able to communicate those needs during mediation or court proceedings.

Anyone preparing for divorce later in life should strongly consider meeting with an attorney. An attorney can advise an individual on legal rights and help him or her reach a settlement that will reduce the financial impact of the divorce.

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5 Reasons to Avoid Going to Divorce Court

The familiar phrase “ugly divorce” usually refers to those that have gone to divorce court because they could not or would not agree on specific items (or anything!). There are some situations in which divorce court is the only option, but it should be avoided if possible. Afterall, a judge will be making decisions about your life, financial situation and how you spend time with your children.  Court should be a last resort, because of the serious negative aspects of this particular means of settling marital dissolution.

  1. Divorce Court creates a very combative atmosphere. Before going to court, lawyers may try to work together to find an equitable settlement, but in court, their job is to “win” for their clients. Tactics may be more aggressive because the lawyers need to place a very strong argument before the judge, and may include the “airing of dirty laundry.” The public disclosure of private family matters is something you might prefer to keep private.
  2. Divorce Court creates intense stress and hurt feelings, further damaging the relationship of the spouses, which inevitably hurts any children involved. All this pain decreases the future possibility of cooperation between the spouses, which also hurts children.
  3. Divorce Court can be long and drawn out. The judge is a very busy person and your court dates need to be fit into his or her schedule. Long periods of lull followed by intense and stressful court proceedings will be the norm.
  4. Divorce Court is expensive. Besides court fees, going to court takes more time and more work for the attorney than other methods.
  5. Divorce Court is risky! You may think you will get “justice” but unfortunately, that may be less likely in court than in one of the alternative methods. This is because judges do not always agree with your version of fair.  Certainly they try to be fair and impartial but, they don’t know you, your spouse, or your children. They don’t have time to hear every stitch of evidence. You don’t get an opportunity to talk to the judge directly; you’re dependent upon your lawyer. Then this judge, who doesn’t know you, hasn’t talked to you, hasn’t walked with you through this process, only knows what the lawyers have said about you and what evidence has been presented about you, will make a binding decision on everything that matters the most to you: your children, your assets, your very future. This is incredible power in the hands of one person.

Generally, unless one spouse is particularly combative, has a history of abusive behavior or substance abuse, or is suspected of hiding significant assets, divorce court is not the best option and should be avoided.

Mediation or collaborative divorce processes are methods that are less stressful and often less expensive. A litigated divorce, which essentially means a lawsuit, is often necessary, since in 80% of cases only one party desires the divorce. Nonetheless, litigated divorces don’t need to go to court, and every effort should be made to prevent that step.

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