CLIENT RELATIONS

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true . Most of the time , existing businesses have shareholder or operating agreements that prohibit a non-titled spouse from gaining control , particularly after a shareholder dies or gets divorced . And even if there aren ’ t such agreements , courts are still reluctant to direct one owner to become a partner with another owner ’ s exspouse . Business owners should enter the divorce proceedings free from these misconceptions and misplaced anxieties .

Be realistic . Even with the precedent outlined above , it ’ s still important to be realistic . Non-titled spouses will receive some value from their ex ’ s business , if not part ownership . This value is called the “ distributed award ,” and while it may be painful to part with , it is the practical , smart course of action and the only way to keep a business active and healthy during divorce proceedings . In most cases , a business owner should buy out their spouse early and for a fair price , typically between 10 % and 35 %. The key factor in determining a precise percentage is the other spouse ’ s direct and indirect contributions to the business . These might mean the spouse ’ s tangible contributions , like hours worked , or indirect contributions like the time they spent caring for children while the husband or wife more engaged in the business traveled and worked long hours .

Collaborate . Last , but certainly not least , financial advisors and divorce attorneys should work together closely throughout the entirety of the divorce proceedings . By talking early and often , they can paint a realistic picture of a business ’ s valuation , allowing for a swift and fair settlement to put the business back on track to succeed .

Divorce proceedings almost always complicate a spouse ’ s business . But those impacts don ’ t have to be deep and negative . By using the strategies I ’ ve listed here , advisors and attorneys can ensure that the end of their client ’ s personal relationship doesn ’ t also mean the end of their professional ventures .

GUS DIMOPOULOS , ESQ ., is managing partner of Dimopoulos Bruggemann P . C ., a matrimonial and family law firm based in Westchester County , N . Y ., that specializes in high-net-worth divorces .

30 | FINANCIAL ADVISOR MAGAZINE | SEPTEMBER 2024 WWW . FA-MAG . COM