FACT OR FICTION? FAMILY LAW SEPARATIONS Part II

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  • June 10, 2014

This is a continuation of Fact or Fiction? Family Law Separations Part I.

fact-or-fiction-part-2Here we look myths relating to the family business, using emotion to get what you want, and inflating a personal budget to influence support entitlement.

The short answer to the question is it a myth is followed by some preliminary questions to consider. There’s a brief explanation of the myth to reflect on. I’ll then offer a quick guide to the process options.

The family business is always the first asset to be disposed of in a divorce.

The short answer is: Fiction as it rarely happens
The preliminary questions to ask:
  1. For what ultimate purpose will disposing of the business satisfy?
  1. How will altering the structure of the business impact the financial well being of the family?

If the business is thriving, the simple reaction is why kill the golden goose and negatively affect the whole family? The business will be valued and through that process its strength and viability will be assessed. If raising capital to meet an obligation to share one half of the business’ net value as part of the equalization of the spouses’ net worth, there are many other creative options to selling the whole enterprise. Restructuring may result in a more efficient operation limiting involvement or removing a spouse from further activity in the business.

The chartered business valuator (CBV) and often the business Chief Financial Officer and Chief Legal Officer will work with the spouse owner(s) and his or her family law lawyer to consider how to handle the business at this family crossroads.

Quick Guide:

Litigation, Traditional Negotiation, Collaborative and Mediation: In all processes, the financial health, outlook, value of the business will be carefully reviewed by a CBV. Three levels of reports can be generated, each varying in the research and breadth of the review. For Litigation, the court ready Comprehensive Valuation Report is used. For the Traditional Negotiation, Collaborative and Mediation processes the lesser standard of the Calculation Report is used. If more information is required, the CBV can provide a report at the middle level or Estimate Valuations Report.

In the Collaborative process the CBV will often be jointly retained as both spouses will benefit from the exercise.

The more emotional my response, the more my views will be heard and respected.

The short answer is: Fiction
The preliminary questions to ask:
  1. If there are important future-reaching decisions to be made today, how can you focus on those?
  2. If you want to achieve your goals and wishes don’t you want them to be heard and understood by your professional advisors so they can help you achieve them?

For those who may have been blindsided by a spouse’s statement that the marriage isn’t working for them anymore, moving forward can be tough. Being angry, overwhelmed, and confused is a signal to take the time to seek assistance from your doctor, a therapist, counselor or divorce coach.

Your lawyer’s role is to offer you divorce and family law legal advice. They are not professionally trained to provide emotional healing therapies. Getting your divorce and family law needs understood and lucidly be able to portray your dreams to your lawyer requires that they be expressed by you in clear, plain language. Mixing emotion with your aspirations increases your costs, inflames the situation and drags out the process. That’s exactly what you seek to avoid.

Quick Guide:

Litigation, Traditional Negotiation, Collaborative and Meditation: In the Litigation process you risk having your pleadings struck for using inflammatory or accusatory language. Emotional outbursts in court will not be tolerated. In Traditional Negotiation your divorce lawyer will be communicating directly with your spouse’s family law counsel. Correspondence is forwarded to a client to review and offer feedback and instructions to their own lawyer. Wise counsel will eliminate the emotional colouring from their client and deli ever reasonable settlement focused  responses.

In the Collaborative and Mediation processes the clients are often communicating directly with each other. Having a neutral facilitator or mediator at the table to balance compassion with progress keeps matters civil.

Everyone inflates their personal budget expenses to get more support from the other spouse!

The short answer is: It should always be a Fiction. Regrettably yes, sometimes it’s a Fact
The preliminary questions to ask:
  1. When the source documents are reviewed against the values in the financial statement and they don’t match, will you have lied under oath?
  2. If you were ashamed to include the real extent of your expenses are you shortchanging yourself down the road?

As a family law lawyer with more than two decades of experience I am very familiar with what constitutes reasonable household expenses, babies’ and children’s needs, university costs, and so on. An inflated expense is obvious. And it tells me to pay even more attention to every other entry in the financial statement. The financial statement is signed under oath that the values expressed are to the best knowledge, information and belief of the deponent. I will have access the documents supporting that disclosure. I’m going to ask more questions and demand the best evidence possible to ensure that the foundation for the support and property sharing calculations are spot on for my client’s benefit. That level of scrutiny will be very expensive for the spouse who inflated the values which ultimately slows the pace to resolution.

Quick Guide:

Litigation, Traditional Negotiation, Collaborative and Meditation: In Litigation orders will be sought to compel the spouse to explain the discrepancies and may include a request for a forensic accounting report. In the Traditional Negotiation process there will be written requests for proper disclosure and supporting documentation.

In the Collaborative and Meditation processes there will a session where a line by line review of the budge expenses and other expense claims will be carefully scrutinized. Typically as these are interest based and transparent processes, the spouse will be asked directly to explain the values and how they were arrived at.

For more information on these legal issues or to discuss other family law or divorce matters you may have relating to any of these approaches, please contact my office.

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