BUSINESS OWNER DIVORCE

What a Mississippi Business Owner Needs to Know About Divorce

You have worked tirelessly to build your business from the ground up, or you stepped into a family operation with a generational history of success. Maybe you spent the better part of two decades in school honing your professional skills, and you are only now reaping the benefits of your efforts. You admit your focus on the family has not always been what it should, or you have graciously sat on the career sidelines while your spouse was the primary wage earner and you took care of the kids.

Regardless the situation, ownership in a business creates complex issues requiring the right professional guidance

As a business owner, you may have flexibility in your schedule when it comes to co-parenting arrangements. You don’t work 9 to 5 and you need your custody schedule customized for your lifestyle.  When it comes to financial support, sure you have the advantages of being a business owner, but there is also uncertainty about your income from year to year. This year you may have a huge spike based on one-time circumstances. The next you may experience a record low. This kept you up at night before the wheels fell off your relationship, and the pressure is only squeezing harder now that everything is different. You have made mistakes in business and in life, but the potential for life altering trajectory has never been higher.

Another challenge of a business owner in Mississippi facing divorce is the valuation and division of the business itself. Because businesses are income producers, they usually should not be taken apart and divided like a 401(k). Also, while certain types of businesses are bought and sold every day in Mississippi, others have limited value outside the professional’s reputation. Additional challenges exist in closely held family companies that have been around way longer than your marriage.  Whether you work in the family’s business, or you spend your time and energy on other endeavors, Mississippi has a unique legal stance when it comes to business owners who divorce.

More than any other area of family law, the reputation and experience of your counsel is of paramount importance.  At R+E, phrases like “fair market value” and “goodwill” are a part of our everyday vernacular. Forensic accountants, private investigators and tax attorneys are on our speed dial for our business owner clients.

According to the Mississippi Supreme Court, the value must be determined on a “fair market value” basis and the only approved valuation methodology is the Net Asset Approach, which calculates the value of the assets and liabilities with no entity or personal goodwill, but with appropriate discounts related to marketability and control. The valuation date is set by the Court. All of this appears simple. However, it can quickly become complex if a spouse owned a business or practice prior to the marriage, inherited a business, or acquired or sold a part or all of a business during the marriage. These events might lead to issues such as value appreciation, commingling of assets, or transmutation that must be carefully analyzed.  Jim KoerberCertified Valuation Analyst

Help Us Help You

One of the ways you can help yourself streamline the divorce process is to begin gathering documents which are commonly requested. The easiest way to do this is to obtain a USB storage device and save electronic copies of the following documents. While this list is not comprehensive, it will help you get a good head start on the information exchanges which usually take place during the process of divorce. We recommend you continue to gather new information as it becomes available to you.

  • Copies of your last several paycheck stubs;
  • Copies of your last three annual state and federal income tax returns in full form as filed, including those which were prepared for any business in which you have an ownership interest;
  • The last six monthly account statements for all of your personal and business banking, investment, retirement and/or credit card accounts;
  • A copy of your most recent Social Security Statement;
  • Any financial statement you have prepared for any reason in the last three years;
  • Copies of all insurance policies that are maintained by your or for your benefit;
  • Deeds and debt instruments for all real estate owned by your personally or through any business interest you may have; and
  • Any other document which you believe will help us understand your situation better.

We Can Help You

Here is the way this works, have someone call our office (601-898-8655) or confidentially submit a basic intake form so our staff can complete a standard conflict check. That’s when we make sure nothing on this end will stand in the way of us being helpful. Then, we will schedule a time for you to talk to one or more of our attorneys to go over your situation.

FAQs

Do I need a reason to get a divorce in Mississippi?

Yes.  You must have an agreement or a reason to divorce in Mississippi. This fact doesn’t just puzzle people faced with divorce; family law attorneys who practice in other states think it is bizarre as well. Mississippi is in a small minority of states viewing marriage through this lens. Notwithstanding an annual try by a few brave legislators, our state simply refuses to make it easier to get a divorce. Because proving a legal reason is often pretty difficult, it puts the more motivated spouse in a less leveraged position. Simply stated, whether or not grounds for divorce exist can create unjust outcomes.

Does a mother always get custody of the children?

No, a mother is not automatically entitled to physical custody of her children. This is a common misconception. Mothers and fathers have equal rights to their children under the law, and courts are not supposed to hold preconceived notions on the issue. Parents can either agree to a custody arrangement, or go to court and let the judge decide. A court’s determination of custody will rely on an analysis of the Albright factors, which are as follows:

  • Age, health and gender of the child.
  • Parent having continuity of care prior to the separation.
  • Parent with best parenting skills and willingness and capacity to provide primary child care.
  • Employment of the parent and responsibilities of that employment.
  • Physical and mental health and age of the parent.
  • Emotional ties of parent to child.
  • Moral fitness of the parent.
  • Home, school and coomunity record of the child.
  • Preference of the child at age sufficient to express a preference.
  • Stability of parent’s home environment and employment of each parent.
  • Relative financial situation of the parents.
  • Difference in religion of the parents.
  • Differences in personal values of the parents.
  • Differences in lifestyle of the parents.
  • Other factors relevant to the parent-child relationship.

How is a business valued in Mississippi in a divorce?

In Mississippi, the value of a business or practice in a divorce is straightforward. According to the Mississippi Supreme Court, the value must be determined on a “fair market value” basis and the only approved valuation methodology is the Net Asset Approach, which calculates the value of the assets and liabilities with no entity or personal goodwill, but with appropriate discounts related to marketability and control. The valuation date is set by the Court. All of this appears simple. However, it can quickly become complex if a spouse owned a business or practice prior to the marriage, inherited a business, or acquired or sold a part or all of a business during the marriage. These events might lead to issues such as value appreciation, commingling of assets, or transmutation that must be carefully analyzed. (Special thanks to Jim Koerber, CVA)

How long does it take to get a divorce in Mississippi?

In short, it depends. However, the absolute shortest amount of time that two individuals can get a divorce in Mississippi is sixty (60) days from the date that the Complaint for Divorce is filed. Realistically, irreconcilable differences cases take several months to complete, while a divorce on fault grounds can take up to and over a year. The length of time that the proceedings take are influenced by many outside factors that your lawyer will not be able to control, such as your spouse, your spouse’s lawyer, and the Judge’s schedule.

How will the value of our property be determined?

Sometimes valuing property is very simple and can include merely looking to financial statements. Sometimes, however, it is more complicated and we must hire professionals to value the property. How property is valued is largely determined by the specific circumstances, but it is always valued at a fair market value—which means the price a willing buyer would pay the seller given the buyer knows all the details and circumstances surrounding the property.

If I get a divorce, do I have to go to trial?

No, in Mississippi it is not necessary to have a trial to obtain a divorce. In fact, the majority of Mississippi divorces are negotiated and settled outside of court. However, in order to obtain a divorce without a trial, the parties must agree to a divorce on the grounds of irreconcilable differences, which is our legal term for “no fault.”

If my spouse is at fault for the divorce, do I get to keep everything?

Not necessarily. Fault is not specifically considered by the court, but each parties’ contribution to the stability and harmony of the home is a Ferguson factor. In addition, if it is determined one spouse committed adultery, the cheating spouse should only receive ongoing support if they would be destitute without it.

What are my rights during the period of time between separation and the entry of a court order?

Until the entry of a court order, your rights following separation are the same as they were while you and your spouse were living together. This means you and your spouse enjoy the same equal rights to your home, personal property, and children as you did before. This is often the most chaotic period of the divorce process, so communication with your spouse, if possible, can be crucial. We like to call this the “storm before the calm.”

What are the Ferguson Factors?

The Ferguson factors are the considerations derived from a leading Mississippi case that courts now use to determine how to fairly divide property. They are: (1) substantial contribution to property accumulation; (2) spousal use or disposition of assets and distribution by agreement; (3) market and emotional value of assets; (4) value of each spouse’s separate estate; (5) tax consequences and legal consequences to third parties; (6) the extent to which property division can eliminate the need for alimony; (7) the needs of each spouse; (8) other factors which should be considered in equity.

What is lump sum alimony?

Lump sum alimony is usually a one-time payment used to compensate one party who may not have benefitted as much as the other party during the process of equitable division of property.

What is permanent alimony?

Permanent alimony is what most people think of as the traditional type of alimony—monthly payments awarded to take the place of the support given during marriage. It terminates at the death of either party or when the recipient remarries. It can also be modified based on changed circumstances.

Resources related to Fault-Based Divorce

I just wanted to thank you for all of your hard work in helping to finalize the child support settlement. You did an excellent job, and I would highly recommend you to anyone seeking expert legal advice.

I just wanted to E-mail you and tell you how much I appreciate everything that you have done for me throughout my divorce. You have been so wonderful!! I couldn't have asked for a better person to help me through all of this. Through my entire divorce it has seemed like you understand exactly what I have been going through and that has been so helpful... The very first day that I called you, you made me feel so comfortable! You were so easy to talk to and I felt like I could really relate with you. I just want you to know how much your help and support have meant to me. I can't say thank you enough... Good luck with everything and thanks again for all that you have done! You are GREAT!!!

reflecting is a good way to clear your mind. i find myself doing that just about every day. for some reason, i started thinking about last summer the other day. i looked at where i am now; peaceful, calm, sane(well mostly), and...happy. truly happy. then i thought about last year<<{CHAOSDRAMAMADNESS}>> i remember my heart stopping every time the phone rang, and the dread i felt wondering what would unfold next. every day was a whirlwind of emotional overload. several people became a haven to me, but only one guided me through that storm... you. there is no doubt in my mind that God sent me to you because He knew you would take care of me. and you can say you were only doing your job, but you saw me through the greatest crisis of my life to date. there are no words to express my gratitude to you. through this process, i am learning a lot about myself and who i really am-without someone else's definition attached to me. i can be by myself and really be okay. i believe that God has set this time aside for just me and Him. that was kinda hard to accept, but i have and it really makes my life easier. i think i am better for having gone through this whole thing. i just wanted to say thank you for going through it with me.....

Thank you so much for your help. You are a blessing to me. I meant to email you to let you know that I made it back safely but I have been trying to work on these other tests to become certified in Microsoft. I did receive the documents from Lori today. Also I wanted you to see the little girl that you were fighting for, I just hope and pray that one day B. understands that it is never about us, it is all for Z.

Thanks for everything you did to make this divorce as painless as possible. As I said in the beginning, I wanted it my way or I would not be happy. Today, I walked out of your office with a smile on my face. I never thought I would get everything I wanted. If it wasn’t for my faith in God and my trust in you, I do not know how I would have made it to today. Again, thank you for doing such a great job! Hope we can meet on better terms in the future.

I recently had the pleasure of opening some documents from your office and was very elated when I saw your act of generosity. I really appreciate you eliminating the rest of my bill and hope that one day I will have the opportunity to do the same for you. It has been a very stressful year and things just seem to keep getting worse. This was an extreme blessing and once again I am very appreciative of your kindness. I will be glad, and have done so already, to refer you and your firm to anyone that may need your services.

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