FAMILY BUSINESSES RAISE DIFFICULT ISSUES AT DIVORCE

Question: My wife of 12 years (age 36) worked in my business for six years before we separated, and she is quite capable of employment; however, soon after we separated she inherited her mother's estate which throws off pretty good income to her. Now she insists that the income from her inheritance should not count, refuses to go to work, and is seeking alimony from me. Although I continue to operate the business which I owned before we married, I am not interested in paying her alimony for the rest of my life especially when my wife is healthy, is as capable of working as I am, and is the beneficiary of a rather large inheritance that provides her with enough income to provide for herself. But I am no fool and don't want to run up large legal bills if there is a way to compromise. I have heard about rehabilitative alimony as a short term option. How does this type of alimony work?

Answer: Although awarded to encourage a dependent spouse to become self-supporting after a divorce, rehabilitative alimony is generally granted only under exceptional circumstances. To convince the court, you must produce evidence that your spouse will likely be self-sufficient when the ordered payments terminate. If a spouse has been out of the job market over the course of a long marriage, all other things being equal, long-term alimony is a pretty sure bet.

Factors which may considered by the court in deciding whether to award rehabilitative alimony can include: (1) the length of the marriage; (2) the ages, health conditions, and educational levels of both spouses; (3) the respective financial resources and accustomed standard of living; (4) whether you can earn enough to meet your needs while also meeting those of your wife; (5) if she needs it, the length of time it will take for your wife to acquire employment training or skills; (6) the likelihood of your wife’s completion of retraining; and (7) the likelihood that your wife will be successful in getting a job.

In today's job market, even assuming great skills, qualified men and women in their 40's and 50's are having a difficult time finding jobs. Assuming the rest of the criteria has been met, the last one -- the likelihood that your wife will be successful in getting a job -- could be the death knell to your hope to get away with rehabilitative alimony; however, we believe that the income received from your wife's inheritance is certainly relevant and should open the door for settlement talks.

Q: My husband owns a business. After 27 years of marriage, we are calling it quits. Two of our three children work in the business and, someday, will take it over. My husband is willing to share everything with me now except the business. My lawyer says that I am entitled to a share in the value of this business and should take it now. My husband says that if I insist on a share of the business, our children will be deprived in the future. He suggests that when he dies, I will get a large insurance policy that is owned by the corporation. Against my lawyer's advice, I am leaning toward my husband's position. Do you think I am making a mistake?

A: Yes. What happens to your share if the business goes bankrupt in two years -- or next week, for that matter? What happens if the corporation - which you can't control - decides to buy out your husband's share before he dies? What happens if the corporation sells out to third persons? And who knows which of you will die first? Although your children are important, there are too many contingencies for you to wait for your share. There are many creative ways in which this asset can be divided without depriving your children. We suggest that you explore them with your lawyer and tax advisor.

SoloFact: In a growing number of states, however, those who hide assets in divorce cases are finding themselves looking down the barrel of a civil suit for fraud. If allowed in your state, civil fraud suits carry with them the potential for awards of punitive damages.

Jan Collins is an award-winning writer and editor. Jan Warner is a matrimonial, tax, and elder law attorney. Both are based in Columbia, South Carolina. Flying Solo can be found on the Internet at http://www.flyingsolo.com.

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