8 Steps to a Contested Divorce Involving Small Businesses in California
It’s rare for divorces to occur uncontested, especially when small businesses are involved. Owning a small business together likely means both of you have contributed to the business in some way. If you do not take the right steps early on in the divorce process, you risk loss and if you have children, you risk leaving a legacy for your family. The following eight steps to a contested divorce involving a small business in California can help you mitigate the consequences of a divorce as it relates to your business.
1. Meet with a Divorce Lawyer
After finding the right family law attorney to take your divorce case, he or she will thoroughly evaluate your case. You will have to provide your attorney with any and all documents concerning marital property and assets. This also includes documents related to your business, including business taxes, financial records, ownership records, and anything else that is relevant. Your attorney will prepare your divorce petition, which will include details about dividing marital assets and liabilities, spousal support, child support and custody if applicable, and details about your family business.
2. Serve Your Spouse with the Divorce Petition
After your lawyer has filed your petition with the court, he or she will serve the papers to your spouse, sometimes with the help of a process server. In the event you cannot locate your spouse, your attorney might have to publish a legal notice in the local newspaper of your county. Typically, the court will take care of service, and might have a sheriff’s deputy serve papers if the process server cannot successfully serve your spouse. In a contested divorce, it’s likely your spouse is not going to cooperate with service. Yet, if he or she plays an active role in the business, you or anyone can serve the papers at the business.
3. Wait for Your Spouse’s Response
Once you serve your spouse with divorce papers, you need to wait for their response. If you already know they are contesting the divorce and you have disputes about the business, that response will come within the 30-day time frame allotted by California law. It’s at this point that the divorce process can really start to impact your business. It’s in your best interest to keep your business operating throughout the divorce, especially if you do not want to sell.
The petition and response are now on record, so it’s likely to court will implement temporary orders for custody, living arrangements, and finances. When a small business is involved, it’s common for the court to issue temporary orders that allow business activities to continue as normal. The order will typically prevent you or your spouse from selling any part of the business or engaging in any large transactions such as restructuring, refinancing, or any other activity that could impact the value of the business. Once discovery and settlement are complete, temporary orders will be lifted and permanent orders will be part of the final divorce decree.
4. Going Through Discovery
The discovery phase of the divorce process promotes transparency about issues related to divorce. Each partner gets detailed information from the other about property, income, and more. When a small business is involved, your books will be wide open during discovery. If you or your spouse is trying to hide business assets, it will likely come out during discovery.
If you do not have a current business valuation, you can expect to have one done during discovery. If the court has not yet implemented any temporary orders, you and your spouse can request orders after going through the information you receive during discovery. Your attorney might gather that information by requesting the other side provide answers to written questions, taking a deposition, and requesting documents.
5. Attempt to Reach a Settlement
California courts typically prefer spouses to reach a settlement agreement before their final divorce hearing. If you cannot reach an agreement on your own, a judge might order mediation to negotiation any issues with your marriage, including issues with your business. Maybe you disagree about the value of the business, the amount of a buyout, or the role one of you will play in the business after the divorce. If you cannot agree, you will need to go in front of a judge, who will make all final decisions. It’s in your best interest to come to an agreement so you aren’t forced to sell your business and split the proceeds.
6. Attend Your Divorce Hearing
When you go in front of a judge, you can present all discovery evidence to the court and provide witnesses. Each side also has the right to cross-examine witnesses and make a closing argument. The judge will listen to all the evidence related to your divorce and issue a written order. Small businesses make contested divorces more complex, so it’s likely you will have to wait at least a few days, if not a few weeks before a judge issues writes the final order.
7. File a Post-Trial Motion
If you or your spouse is unhappy with the final order, you can file a post-trial motion for relief from the final judgment within 30 days from the day the judge issued the order. If you file a motion, your spouse has 30 days to respond. If the judge approves the motion, the party who filed the motion can make a case as to why the judge’s ruling is unfair.
8. File a Notice of Appeal
If the judge denies your post-trial motion, you have 30 days from denial or from the final judgment to appeal the decision. You have some time to file the necessary paperwork from your original hearing with the appeals court, and your spouse typically has a month to file a response.
Contact Pedrick Law Group Today if You Own a Business and Divorce Is in Your Future
When one spouse owns a small business or both own a business together, it adds to the complexity of a divorce. Business property, assets, and post-divorce roles lead to more potential disputes. Help preserve your business and mitigate the financial consequences of divorce by hiring a divorce attorney. Contact Pedrick Law Group today online or 818-325-3934 to discuss the details of your business and learn more about the best strategy for your divorce.