Collaborative law: Protecting your business outside of court

On Behalf of | Oct 7, 2024 | Divorce, Property Division |

When a business is part of the marital property, it can complicate the divorce process. However, collaborative divorce offers a solution in which both parties can agree to reach a settlement without going to court.

How does it work?

In Texas, the Collaborative Family Law Act outlines specific rules for the procedure, offering a way for people to resolve their disputes outside of court. It makes sure that:

  • Both parties work together in good faith, each with their own legal counsel and representation.
  • There is full transparency since everyone must agree in writing to share all essential information openly.
  • The process ends if either party goes to court, requiring new legal representation.
  • The law protects most communications as confidential, with some exceptions.

These rules help ensure that the process is fair, open and focused on finding solutions that work for everyone while maintaining legal protections for all parties involved.

How does it differ from traditional divorce?

In a traditional divorce, proceedings might lead to decisions that could disrupt operations and lower the business’s worth. Depending on various factors, the court may order actions such as selling important business assets or requiring one spouse to buy out the other at an inopportune time.

In contrast, collaborative divorce can have potential outcomes that preserve or even increase business value. These might include:

  • A gradual buyout plan that doesn’t strain cash flow
  • Clear job descriptions if both decide to keep working in the business
  • Fair compensation to the party leaving the business without compromising its operations

This approach allows for more flexible, business-friendly solutions than a court might provide. However, it may not be beneficial for all circumstances. If either party is unwilling to compromise, maintain professionalism or keep open and honest communication, traditional litigation may be necessary.

You have a choice

Collaborative divorce can help protect your business interests if you’re willing to work constructively with your ex-spouse. However, as with any legal issue, it’s important to talk to an attorney to see if it’s right for your situation.

Categories

Archives

FindLaw Network