Guest post by Robin Perrigo-Mermans, Esq. of ROAD to RESOLUTION
Who runs the world? Well, if you ask Beyoncé, the answer is girls.
Okay, I know… that’s not exactly how you imagined someone would start a blog about divorce, but here we are. This leads me to the topic of something I’ve been answering a lot of questions about lately: What should a woman know about divorce if she owns a business?
In fact, according to the National Association of Women Business Owners, there are over 11.6 million women who own a business in the United States. These women, or fempreneurs as they’re also known, employ nearly nine million people and generate $1.7 trillion annually. For many of these women, they’re earning just as much or more than their spouse. That means if their marriage heads toward divorce, there could be some concerns over who gets what when dividing assets, property, and the business.
As a licensed mediator and collaborative family law attorney, who is also a female business owner, I put together a list of eight things every woman who owns a business should know about divorce before starting the process:
- Create a Plan
When you started your business, you likely put together a business plan. You’ll need to have another plan if you’re considering divorce. Do not put your head in the sand and wait until your divorce is imminent. If you believe divorce is even a remote possibility, you need to be prepared. Having a plan will help you determine how your business may (or may not) be impacted. You will want to have this plan in place prior to discussing divorce with your spouse and following through with the process. As you create your plan, you’ll want to learn all about your business including assets, debt, and liquid net worth. Be sure to document everything so you can provide that to your attorney, should you choose to seek a divorce.
- Look at Company Ownership
It may sound simple, but who owns your business? It the business in your name only? Is your spouse listed as a partner or co-owner? This will play a role in the division of assets during a divorce. Attach a copy of your formal paperwork (i.e. operating agreement, partnership agreement, etc.) to your plan.
- Identify the Start and Funding of the Business
As a business owner, you’ll need to look to see if your spouse is entitled to a portion of your company. This will depend on if the business was started before or after you were married, and if you used any money earned during the marriage or marital money to support the business. Not all businesses need to be divided during divorce. Under North Carolina law, if the business was kept separate and there has been no use of marital assets it may be considered separate property.
- Value Your Business
You’ll need to know the value of your business. Do not rely on what you or your spouse think it may be worth. I recommend you bring in a professional business appraiser or forensic accountant to value your business.
- Know What You Want
If your business is marital property, you’ll need to decide what you want in your divorce agreement. If you want total control, you may want to consider buying your spouse out from the business. Other options could be allowing them to remain a partial owner with or without involvement.
- Understand it’s Emotional
As a business owner, I know exactly how you might feel about your business. To me, my law firm is like another child and I have an emotional connection to it. That said, be prepared for an emotional journey if you have to divide your business with your spouse during divorce. It’s going to be easier said than done, but I want to encourage women to separate their emotional attachment from the practical aspect of the business. At the end of the day, divorce is a business transaction in itself so try to keep your focus on the end result.
- Choose a Collaborative Divorce
A collaborative law divorce is an alternative dispute resolution proceeding which takes place out of the courtroom. You and your spouse are each represented by different collaborative-trained divorce attorneys. This is a different process from litigation because you and your spouse, along with your individual attorneys, sit down together to fairly divide your assets. It is often considered a win-win method. Once you and your spouse choose the collaborative method, you must sign what is known as a Participation Agreement. Through this contract, each spouse shows their commitment to using collaboration and cooperation strategies during the divorce process.
Through my experience, the collaborative divorce method works extremely well in high net worth divorces. Collaborative law offers a right to privacy during divorce that litigation isn’t able to provide. Your divorce documents and court records are not public information because you and your spouse won’t have to use the court system. A divorce with a collaborative proceeding is also known to move faster than a litigated divorce because it doesn’t involve court calendars, back-and-forth proceedings, or unnecessary chaos. The divorcing couple can also utilize additional experts to help create a tailored agreement that is fair and balanced for everyone. These neutral experts may consist of additional lawyers, financial advisors, planners, coaches, and/or child specialists.
- Find a Relatable Attorney
Once you choose your divorce method, you’ll want to find an attorney who you can trust and who can relate with you. No one will understand your situation more than an attorney who also owns a business. At my law firm, ROAD to RESOLUTION: Divorce Mediation and Collaborative Family Law, we pride ourselves on having a unique personal perspective that allows us to connect with our clients. I’m a divorce attorney who has also been divorced, I’ve been a single mom, and I’m a business owner. During any legal matter, you want to find an attorney who will not only represent you, but will also understand you and recognize your situation.
If you have any legal questions about using collaborative law for a divorce that involves a business, please give us a call at (980) 260-1600. Our Charlotte-based team is here to help you and your family. Visit our website www.ROADtoRESOLUTION.com to learn more about our methods and how we can help you during this time.
Note: This blog is intended to be informational only and shall not be construed as legal advice.
Robin Perrigo-Mermans is a collaborative attorney and certified mediator. She owns ROAD to RESOLUTION, a divorce mediation and collaborative family law firm, in Charlotte. Due to her unique perspective as an attorney, mother, and stepmother, she is an expert in shared parenting solutions and co-parenting guidance. She is committed to using her personal story and passion to help her clients save time and money, while avoiding unnecessary emotional turmoil during their divorce journey and on their road to resolution. Licensed in North Carolina and South Carolina, Robin is a trained Collaborative Attorney and a Dispute Resolution Commission Certified Mediator. She is a member of the International Academy of Collaborative Professionals and the Carolina Collaborative Law Group.