What’s different about this story?
Recently, the more than 25-year-old marriage between Sam and June ran its course. Sam’s business was the family’s financial engine and the marriage’s greatest asset. However, when he and June mutually decided to divorce, his business was in a down cycle, so its valuation for the settlement was a major concern for both.
Luckily, June had confidence in the company’s ultimate upswing, and they were able to agree that she would maintain nonvoting shares in lieu of receiving alimony, an arrangement that helped to keep the business intact. Could this sound reasoning and win-win solution be achieved in the process of a divorce?
Yes, it sprung from an alternative form of divorce called collaborative practice, increasingly popular with divorcing couples who want to plan for the future or have children or businesses and for same-sex marriages unsanctioned by the courts. Collaborative practice takes place outside of the courts, involves attorneys and (depending on the need) a divorce team of child specialists, financial experts and process coaches who inform the process and allow couples to tailor educated decisions for themselves and their families.
Had Sam and June opted to litigate, Sam likely would have had to pay alimony and June’s income would have been much lower than it is now from dividends she receives from a mature company. Fortunately, Sam was comfortable with the collaborative solution devised with the financial specialist, giving June a role as a silent shareholder. The business has continued to grow instead of being drained or dismantled, as often is the case for businesses bound to divorcing couples.
"Small businesses are just like children in a marriage," says Lynn Russell, a family law attorney with Russell & Herrera in Atlanta. Russell equates collaborative financial specialists with the child specialist on the collaborative team except, instead of worrying about children, they design "the long-term co-parenting plan for the business."
The financial specialists on a collaborative team are often strategic planners and consultants who work with businesses in restructuring. Their role is to help divorcing couples understand the financial implications of settlement options with information, analysis and projections.
In a collaborative divorce, when there is a business at stake, the financial specialist interviews clients and employees, looks at organizational structures and determines the company’s fair market value. Whether or not there is a business involved, as the team begins to discuss asset division and support payments, the financial specialist will use the couple’s mutually agreed-upon assumptions to provide short- and long-term projections and clarify the estimated effect of potential settlements on lifestyle and future financial security for both households.
"The collaborative financial specialist educates clients," said Bob Bordett of Consolidated Planning and a board member of the International Academy of Collaborative Professionals (IACP). "I had a client this morning tell me what they liked was the fact that when she came into the process she did not have a clue about her financial situation. Her husband handled everything. After working with the couple and bringing the wife up to a level playing field she felt comfortable and able to make wise financial decisions to help the process move along."
By keeping the dispute outside the courts and using the professional services of specialists efficiently, collaboration generally costs about one-third less than a litigated divorce.
Finally, while collaboration was developed to ensure an equitable and respectful divorce, its core principles are applicable to other forms of dispute resolution. Russell is, in fact, part of a task force formed by the IACP to apply the process to business dispute resolution around probate and estate work, nonprofit and religious institutional disputes, medical error and more.