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.
Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations. Steve Jobs
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 Koerber, Certified Valuation Analyst
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 related to Business Owner Divorce
- Do I have to catch my spouse in the act to prove that they are having an affair?
No, it is not necessary to catch your spouse in the act. Due to the secretive nature of affairs, Mississippi courts do not require direct proof to grant a divorce on the grounds of adultery. In order to prove a case for adultery, one must show that their spouse has had the inclination and opportunity to have an affair.
- 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 you can learn more about by visiting Family Law University.
- 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 much does a divorce cost?
As with so many other questions regarding divorce, it depends. The cost of a divorce proceeding can vary from relatively inexpensive to extremely expensive, depending on the complexity of the issues involved in the case. In order to even estimate such an expense, it is necessary to have a consultation with a professional so that they can evaluate all of the circumstances involved in your situation.
- 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.
- In Mississippi, if I have sex with my spouse after I find out about an affair have I lost my ground for divorce?
Maybe. One often used defense to adultery is “condonation.” Condonation is the forgiveness of a marital wrong. Condonation may be expressed or implied. Staying in the same home does not constitute condonation and does not act as a bar to a divorce being granted, but some older cases talk about how one act of sex may be considered “forgiveness.” However, even if a true condonation exists, it is conditioned on the offending spouse's continued good behavior and full knowledge of what is being forgiven. One cannot forgive what they do not know. If your spouse does not discontinue the affair, you still have grounds for divorce. In practical effect, condonation places your spouse on a form of temporary probation. So long as he observes the conditions on which the forgiveness rests, you do not have grounds for divorce. It is necessary also that the condonation be free and voluntary. If it is induced by fraud, fear or force, it is of no effect.
- 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 a “standard” visitation arrangement?
There is actually no such thing as a “standard” visitation arrangement. Custody and visitation schedules are each unique, and can be structured around the families that will be living under them. Perhaps the most common situation is for the noncustodial parent to have visitation with their children every other weekend, with a night of visitation in the middle of the weeks in which they will not have weekend visitation. It is also common for parents to alternate holidays, and for each to have extended periods of time with the children in the summer.
- What is a guardian ad litem?
An attorney the court appoints to represent the best interests of a child in a divorce or parental rights and responsibilities case.
- 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.
- What is physical custody?
A parent who has physical custody of their children is the parent with which the children live most of the time. Typically, one parent will have physical custody of the children, while their former spouse will have rights to periods of visitation with the kids. It is possible for parents to share joint physical custody of the children. Under these circumstances, the children typically spend an equal amount of time with each parent.
- What is rehabilitative alimony?
Rehabilitative alimony is a specific type of alimony used to keep one spouse “on their feet” after a divorce and while that spouse prepares to re-enter the workforce. It allows a spouse who may not have been working for a period of time during the marriage to have stability in order to adjust to working again.
- What is reimbursement alimony?
Reimbursement alimony repays one spouse for the support he or she gave the other spouse during the marriage. Common examples of this include when one spouse worked and supported the other spouse through school.
- What makes property marital or non-marital?
Marital property is property obtained during the marriage, whereas non-marital property is property given to one spouse through gift or inheritance. It is important to remember that courts presume property is marital unless one party proves it is non-marital by showing the property was given to that spouse by specific gift or inheritance.
- What should I do if I suspect that my spouse is having an affair?
Your course of action should depend on your goal. If it is your desire to reconcile with your spouse and work on your marriage, then confronting him or her would be best. On the other hand, if reconciliation is not option, you may want to keep quiet and gather evidence. Cell phone and text messaging records typically speak volumes. Hiring a private investigator is also an option. While PI’s can be relatively costly, the results of their investigation can be quite valuable.
- When my child turns 12, can she choose where she wants to live?
There is a misconception among Mississippians that a child may choose the parent with whom he or she wishes to live upon reaching the age of twelve. This is simply not the case. There must be a showing of material changes in circumstances since the last Order which have had an adverse affect on the child and that their best interest, coupled with the parental selection. While our law on this topic is well settled, many chancellors believe that if a child has made a choice, it should be honored. This is not the law.
- Why do you talk so much about energy when it comes to marital property?
The best way to think about how marital property is created is by determining whether any marital energy was used to earn income or grow the asset. If you bring something into a marriage, or you receive it by gift or inheritance, you did not expend energy during your marriage to obtain it. However, if you went to work everyday to earn income that resulted in the purchase of something, or you stayed at home and kept the children exerting energy while your spouse went to the office, those efforts result in the creation of marital property.
- Will I have to sell my business if I get a divorce?
Probably not. Most business interests in Mississippi are not easily sold. To accomplish equitable distribution, all marital assets are considered, but not every asset is necessarily divided. A business is the best example of this type of asset. Courts routinely use lump sum alimony to balance each spouse's interest.
Forms and downloads related to Business Owner Divorce
- Stay or Go EBook (766.00 KB)
- Divorce in Mississippi EBook (265.00 KB)
- Contested Grounds MCA 93-5-1 (132.00 KB)
- Cruelty Worksheet (11.00 KB)
- Divorce Grief Cycle (164.00 KB)
- Domestic Violence Shelters (269.00 KB)
- Financial Declaration (53.00 KB)
- Form Final Judgment of Divorce (51.00 KB)
- Form Irreconcilable Differences Complaint (24.00 KB)
- Glossary of Legal Terms (995.00 KB)