Making the decision to contact a family law attorney to address your legal issues is understandably stressful, and can add anxiety to the already painful concerns that have prompted your need for representation and legal advice. Whether your matter is related to divorce, child custody, child support, spousal support, alimony pendente lite, alimony, or equitable distribution matters, knowing in advance what to expect can help you be prepared and raise your comfort level. The information provided here will hopefully take some of the mystery and worry out of taking that first step: the consultation.
Once you have contacted the law firm and have confirmed that there are no existing conflicts, you will be scheduled for a consultation with a family law attorney. Consultations generally last for an hour but could be longer depending on the circumstances of your case. Prior to your consultation you should gather documents for the family law attorney to review. You should bring your important financial documents to the initial consultation, including tax returns, bank statements, retirement account statements, 401(k) statements, and mortgage statements. You should also bring any statements as to liabilities such as credit card statements, loan documentation and the like. If you have been served any legal documents, such as complaints for child support or spousal support, petitions for child custody, complaints in divorce, notices of any hearings or conferences, you should bring those for the attorney to review during the consultation. Likewise, if there are existing court orders in your matter, such as child custody orders, child support orders, spousal support or alimony pendente lite orders, marital settlement agreements, or any other order, you should bring those documents as well.
When you contact a family law attorney to schedule a consultation, you may already have a lot of questions. Write those questions down and bring them to the consultation so they can be addressed during your initial meeting. In the beginning of the consultation, the attorney will ask about the specific circumstances of your case. Some of these questions may seem very personal or irrelevant but please understand it is necessary. You will also be advised of the applicable laws in Pennsylvania or New Jersey. The family law attorney needs to have a complete understanding as to your facts and circumstances in order to provide quality information. This may be overwhelming, but you will have the opportunity to have your questions answered.
Pursuing a family law matter can be difficult and stressful, but understanding what the first step entails and coming to the consultation prepared will lower your anxiety and result in a more productive experience.
When a business owner gets divorced, the business is often the major asset subject to distribution. Accordingly, the business and its’ ongoing operations are almost always implicated in the divorce. In most cases that I see, the business is a small business with one owner or a few owners. In the best case scenario, the business owners have planned in advance for situations that arise in a divorce through a Shareholders Agreement, Prenuptial Agreements and/or Postnuptial Agreements. Hopefully, the parties’ respective family law and business law attorneys can work together to best protect the business owner to ensure as smooth a transition as possible. Hopefully, the relevant agreements have set forth a valuation formula which can be upheld at law for purposes of the divorce. Counsel can also work together to insure that income is clearly defined and reported so that support is less contentious. Additionally, advance planning can be used to address the below issues so that a divorce does not mean the end to the business. While advance planning is not a guarantee, it will provide additional protections to the business owner.
A divorce can impact internal and external business relationships, support (between spouses and child support), equitable distribution (division of marital property) and business control. In terms of business relationships, banking relationships can come into play, especially if the spouse is a personal guarantee of the loan. It is often not easy or possible to have the spouse removed from the guarantee. The spouse may also have a role in the business and it may not be feasible for them to remain involved. For example, in cases where the spouse is client facing, a delicate balance will be necessary to transition the spouse out of the business without negatively impacting the business. This can be a challenge if the divorce is acrimonious. Finally, the roles of the parties within the business may create sustainability issues going forward. In some cases, one spouse has a particular talent (i.e. software development, marketing creativity or scientific knowledge) which cannot be easily replaced and without which the business may not be able to survive. Such issues impact valuation but also succession and strategy on distribution of assets.
As for support, when a business owner is a party to a support action, whether for support for a spouse or for a child, calculating income can be challenging. The definition of income for purposes of determining support is very broad and is not the same as taxable income. There can be practical issues in obtaining information and documents which reflect the income. Legal issues can also arise, such as whether income is being reported or if the court can compel income or retained earnings to be distributed from the business to the owner to pay support.
In equitable distribution, the business must be valued so that division of the assets can occur. Business control also comes into play. It is unusual for parties to retain joint ownership or for the non-business owner spouse to receive shares of the business so creativity and/or structured payments are often necessary unless there is enough cash reserved for an outright payment. The payout can cause a financial strain for the business.
To best protect a business in the event of a divorce of the business owner, it is advisable for business owners to have advance planning through the mechanisms listed above. While not a guarantee, it will place the business owner spouse in a much better position than ignoring these issues all together.