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What is the right way to manage divorce proceedings of a business owner?

Article by Hagit Lev, Attorney and Mediator

What is the right way to manage divorce proceedings of a business owner? Divorce proceedings of a business owner can be expensive and ugly. The proceedings can cause many lengthy arguments and mutual slander that may damage the reputation and even lead to losing control of the company due to unfair distribution of shares.

Unique difficulties may arise during the divorce proceedings of a business owner, such as the fear of losing control of the business, a crash of the company as a result of incorrect share distribution, and damaging the reputation of the business owner and of the brand that they have worked on for many years.

Divorce proceedings for senior business owners require a different treatment, since it is a delicate and complex situation, and may cause damage both to the image that the employees and the board of directors have of you, as well as to the image that competing companies have of you. In order to prevent damaging the reputation and minimizing the damage that could be caused to the business, there is utmost importance to managing "quiet" divorce proceedings without press releases, and without the children or spouse sharing their feelings and experiences on social media like Facebook and WhatsApp.

Distribution of assets of business people as part of a prenuptial agreement


The Spouses' Property Relations Law is intended to regulate the distribution of assets in case of divorce. According to the law, each spouse is entitled to half on the joint assets, including the rights in the business. However, the law also determines that assets that belonged to one party before the marriage, or that were received by inheritance or as a gift during the marriage, will not be divided between the couple. If the parties signed a prenuptial agreement, before or after the wedding, the rules of this agreement replace the instructions of the law and determine the manner of distribution of assets.

A married business owner, who is interested in the separation of assets that are accumulated over the years, such that they belong to each spouse separately and will not be subject to arbitrary distribution according to the Spouses' Property Relations Law, may do so via a prenuptial agreement, with advice and instruction from a lawyer specializing in family law. The agreement requires the official approval of the family court during the marriage or notarial approval prior to marriage. The approval will only be given after the court or the notary is convinced that the parties drafted the agreement out of their own free will and understand its meaning and consequences.

Family mediation for business owners prior to divorce


The Mandatory Mediation Law aims to regulate family disputes and prevent debilitating and costly divorce wars in court. Currently, the law requires spouses prior to divorce to try and settle the dispute through mediation and not in court. The parties are required to apply for conflict resolution and to attend four mediation meetings with a welfare officer at the social services offices without the involvement of an attorney. The aim is to receive initial assistance without payment as well as important information regarding child support, custody and division of property.

Drafting a divorce agreement for senior executives


Proper and professional mediation may lead to a settlement outside of court that is acceptable to both parties and thereby avoid exhausting discussions, headaches and high financial expenses. One of the options for a divorce settlement is a divorce agreement in the form of a contract signed by both spouses and handling child custody, support payments and division of property. The main objective of the agreement is to reach mutual agreements and to establish them outside of the courts.

The parties have the right to reach an agreement in the framework of a divorce agreement or to file a claim regarding any subject to one of the competent courts, while the final decision rests with the family court or the rabbinical court. Any of these becomes valid after approval, requiring the parties to follow the clauses. After receiving a divorce following judicial hearings, the divorce proceedings are completed and the parties may manage their businesses separately, without fear of harming the control of the business, its reputation or fear of collapse of the business.

Where should I file a claim for the distribution of assets of business owners?

Two courts deal with divorce - family courts and the rabbinical courts. The main difference is that the rabbinical court rules conservatively under consideration of religion and Halacha, while the family court is influenced by liberal secular perspectives. The moment a claim is filed with one of the relevant courts, that court has exclusive jurisdiction regarding the decision of the claim and any other claim filed later is dismissed immediately. Regarding the division of assets of business owners, it is recommended that the parties file a claim with the family court, which is more flexible and open to suggestions and compromises.

Hagit Lev, Divorce attorney and Mediator
Last modified onTuesday, 07 March 2017 05:53

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