Divorce Mediaton

Keeping a Business Alive During a Divorce by Karen Klein

You can make bad decisions under emotional stress. You might even lose the business entirely. Here are savvy tips from attorney Lisa Hughes

Maneuvering a small business through rough economic seas is tough enough. But doing it amid a divorce at the same time—well, the stakes are pretty high. Lisa Hughes, an accountant and family law attorney, is managing partner at Hughes & Sullivan, a family law practice in Tustin, Calif., a suburb of Santa Ana in Orange County. She spoke recently to Smart Answers columnist Karen E. Klein about how small business owners can get through a divorce without losing their business. Edited excerpts of their conversation follow.

How do you advise small business owners when they come to you and say they are considering divorce?

I tell them to try marriage counseling. And spend at least one hour at it for every year of your marriage. Divorce is the last road you want to take—seriously.

You’ve been practicing for 33 years. You must have witnessed lots of mistakes that people make in their businesses and their lives because they are going through the highly emotional stress of splitting up from their spouses.

A lot of misguided decisions are made during divorces that can cripple or destroy the businesses people have built up through years and years of hard work. And the sad thing is, that kind of business collapse can be avoided.

How can entrepreneurs continue making wise decisions that keep their businesses alive and thriving?

It’s important to recognize this is not a time of business as usual. It’s also important to hire a savvy forensic accountant who can provide in-depth understanding of the applicable law and who has the expertise to testify in court.

It’s also critical to understand the implications of upward or downward trends for the business, and whether the business began before or after the marriage. Many times, if one spouse is a business owner and the other is not involved in the business, the business owner thinks the business won’t be considered in the divorce. But if the business arose or was acquired during the marriage, it is considered the property of both individuals.

What are some business pitfalls to look out for during a divorce?

The truth is that during a divorce, your business and your net worth really have to be an open book. Don’t try to hide anything. Here in California, we had a recent case decision in which a powerful business owner, Mr. Feldman, failed to expose all of his earnings and transactions during his divorce. That violated his disclosure duties, and when his wife discovered his hidden assets, the judge required Mr. Feldman to pay her $250,000 in sanctions along with $140,000 in attorney fees. So providing full disclosure is key to expediting a settlement without sanctions.

Judges in family court have seen everything by the time they’ve been on the bench a week. Was your business making lots of money before the divorce, and then, all of a sudden, your profits dropped dramatically? That’s suspicious. Same with putting your new girlfriend or boyfriend in as treasurer, or vice-president for operations. Don’t change the leadership of your business during a divorce. It looks like you are not operating in good faith.

What are some key things a business owner can do to get through a divorce and keep the business intact?

Do the same things you’re doing to navigate your family through this economy. You have to be conservative, and by that, I don’t necessarily mean Republican. I mean operate cautiously. Always pay your taxes and keep your insurance payments current. If you try not to pay the government, they will come after you, and the penalties and interest they charge you will really add up. In times of stress, you really need life insurance and health insurance. I’m a big believer in not letting policies lapse, even if you’re hurting financially.

Do the divorce rates go down during a time of economic distress or uncertainty?

Divorce rates were trending down the last time I looked, which was early this year. What I think is also happening, just anecdotally from what I see in our practice, is that people can’t afford to separate. Real property values have dropped so dramatically, and so many people don’t have equity in their homes now. We used to use the couples’ house as a nest egg to pay off debts, pay the lawyers, and help the parties get on their feet and have a chance at a new start.

Now, with negative equity, plus declining business or job revenue, couples can’t even finance the litigation. Not only can’t they afford to start two households, there’s so little liquidity in the lending market they can’t even borrow on their homes.

Can divorcing spouses continue to own a business together and work side by side?

I haven’t seen that be successful in the long term. They may start out being O.K. with both staying in the business, but eventually one or the other gets remarried. And when third parties get involved, they are the ones who object. It’s usually best to buy one party out of the business or sell it to a third party. We hate to liquidate a business to fund a divorce, because that’s the thing that provided the lifestyle and the house in the first place. So, try to keep the business going, but you may have to decide which spouse is going to bow out eventually.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

Divorce Mediaton

California Court Rules for Ending a Marriage

A divorce (also called “dissolution of marriage” or “dissolution of domestic partnership”) ends your marriage or domestic partnership (or both if you are both married and in a domestic partnership with your spouse). After you get divorced, you will be single, and you can marry or become a domestic partner again.

You can get a divorce if you say you have “irreconcilable differences” with your spouse or domestic partner. You do not have to give the court any other reason or prove anything. There is no “guilty” or “non-guilty” person, from the court’s point of view. That is why California is called a “no-fault” divorce state.

The only thing the court is interested in is helping the separating spouses or partners reach a fair agreement about how their life will be restructured after the divorce so they can move ahead to rebuild their lives.

When you start a divorce case, you can ask the judge to make orders about:


  • Custody and visitation;
  • Child support;
  • Spousal or partner support;
  • The division of your property; and
  • Who will be responsible for paying debts.


If lawyers are involved, you may be able to get orders about who will pay their fees. You can also ask the judge to make other orders about things like domestic violence. Learn more about domestic violence and staying safe.

The divorce process will take at least 6 months from the date the person filing for divorce officially lets his or her spouse or domestic partner know about the divorce. The case can take longer. BUT it cannot be faster than the 6 months. This is a mandatory waiting period required by California law and no couple can be divorced faster than 6 months. You will be able to get all your paperwork turned in to the court and your divorce judgment approved, but the divorce itself will not be final until at least 6 months after starting the case.

Summary dissolution
Some couples that have been married or in a registered domestic partnership for less than 5 years can get a “summary dissolution” as long as they also meet other requirements. A summary dissolution is an easier way to end your marriage or domestic partnership (or both). Learn more about summary dissolutions.
California residency requirements for divorce

For married persons to get a divorce:

You MUST meet California’s residency requirements. Either you or your spouse must have lived in:


  • California for the last 6 months, AND
  • The county where you plan to file the divorce for the last 3 months.


If you and your spouse have lived in California for at least 6 months but in different counties for at least 3 months, you can file in either county.

If you do not meet the residency requirement, you can still file for a legal separation. Once enough time has passed so that you meet the residency requirement for a divorce, you may file an “amended petition” and ask the court for a divorce.

EXCEPTION: Same-sex married couples who got married in California but do not live in California and live in a state (or states) that will not dissolve a same-sex marriage, can file to end their same-sex marriage in California, regardless of these residency requirements. You must file in whichever county you were married. Keep in mind that if neither of you lives in California, the court may not be able to make orders about other issues like property and debt, partner support, or your children. If this is your situation, talk to a lawyer with experience in same-sex marriage laws. Click for help finding a lawyer.

Divorce Mediaton

10 Reasons to Consider Mediation

10 Reasons to Consider Mediation

More and more people are using divorce mediation these days. If you, or someone you know, are getting divorced, mediation may be a good method to try.

1. It Costs Less

In divorce mediation, you meet together with one divorce mediator. You usually share the cost, which is commonly between $2000 and $5000 total. If you were to retain separate attorneys to represent you in the divorce, you would each typically pay a retainer of $1500 to $5000 just to get started. A typical court divorce can cost $40,000 – $60,000.

2. You Have Control

In divorce mediation, you both control how quickly or slowly decisions are made, when the divorce petition is filed, and what the terms of the divorce will be. These are written into the Marital Settlement Agreement. Each step is by agreement, in contrast to the adversarial process in which attorneys set court dates and judges make decisions with limited time and information.

3. Paperwork Done for You

Many people try to do their own divorce these days, but run into difficulty trying to understand the laws and the confusing paperwork involved. As you Mediator Bill Ferguson will work with you so you can complete all your decisions and then he will provide you with some affordable options for the filing of your final agreement.

4. Easier on the Children

The worst aspect of a divorce for children is the conflict between the parents. Divorce is traumatic enough for children, but they do better when you work together to make adult decisions and do not put them in the middle.

5. Easier on You

The way your marriage ends will significantly affect the way you approach your future relationships. When you use a mediator to help communicate and make important decisions, it can be easier to move forward and accept the past, rather than turning hurt and anger into an expensive court battle.

6. You Can Still Go to Court

When you use divorce mediation, you do not give up your right to go to court. If you are not satisfied in mediation, you can stop at any time, retain a separate attorney and have the judge decide the unresolved issues.

However, what has occurred in mediation is legally confidential and cannot be repeated in court, so you can start fresh or if you are happy with the progress that has been made you can use agreements made in mediation and then ask the court to resolve the unsolved issues.

7. Emotions Can Be Managed

Often, you want to be heard and understood in the divorce process. In discussions on your own, this may be difficult. Anger and resentment may be unintentionally triggered. A trained mediator can help you address feelings, without allowing such feelings to dominate your decision making process. In court, emotions often drive the case, and the cost, more than any legal issue.

8. It is Confidential

Discussions and tentative agreements are confidential in private divorce mediation. Confidentiality makes it easier for you to make offers and consider alternatives without having everything completely planned out. You can arrive at new agreements neither of you had previously considered. You don’t give up any legal rights by trying mediation, and what is said in mediation may not be repeated in court.

9. It Builds on the Positive

In mediation, you are both encouraged to find common ground for making agreements. The focus is on decisions about the future, not past behavior.

10. You are in Control

In mediation, you are both in control of the outcome based on your participation in the process instead of being at the whim and mercy of an over burdened family law court system.