If your thinking about divorce, you might talk to a lawyer first. We will call this divorce planning. Every case is different. Every case will have a different set of facts and circumstances. Standing around the coffee pot talking with your friends who have been through divorce, well — is simply not a good way of getting advice. It is the worst way.
So client’s business grosses 1.5 m each year on average. Goes up, goes down. Pretty consistent. Girlfriends tell his wife that she will get a ton of money out of the divorce. That she is entitled to 1/2 the value of the business. The business makes a ton of money therefore it is worth a ton of money. Well, girlfriends you are wrong. The business was a service business and built upon the personal relationships that my client had with his customers. That’s called professional good will and cannot be valued and cannot be divided on divorce. Business did have some reputation in his industry, however. So, in the end she got about 75K out of the business, 1/2 of the house, her retirement and her car. Yippie-Ki-Yey. Girlfriends at the coffee pot got it wrong. Last I heard, she was dead broke and would probably have to move in with one of her daughters.
Okay, so lady signed a prenup, then she signed a partition later on. Client owns a business. Has, in the past, been pretty successful. The business, like above, is all based upon personal relationships between the client and his customers. It is a personal service business. Like above, the business is based upon professional goodwill. Note, because of the prenup and later partition – she really missed the boat. She was dead in the water as soon as she filed her case. She just couldn’t stay away from that coffee pot.