Posts Tagged probate court
While you were married, you and your ex were running a family business together. You win the business in your divorce, but your ex now opens a competing business right next door and is siphoning away customers from you.
Sound like an episode of Two and a Half Men? What’s a business owner to do?
Well according to a recent Massachusetts decision, a Probate Court judge can order the ex-spouse to not compete against you.
Here’s what happened: a husband and wife ran a feed and grain store while they were married. The wife’s a veterinarian. In their divorce, the judge awards the business solely to the husband.
The story gets a little sketchy from there: the trial judge found that the husband’s landlord then evicted his business from the premises. Then, the wife, with the help of her parents, opened up a competing feed and grain store in the exact same location.
In the divorce, the husband asked the judge to prohibit his ex-wife from running the competing business arguing that the value of the family business awarded to him was being diminished by the ex-wife’s activities. But, the judge refused the request.
The Appeals Court cried “foul!” They held that a divorce court judge can order an ex to not compete in the family business. The reasoning has to do with the ‘good will’ of the business which is considered a valuable asset in the going concern. If the judge awards a family business to one spouse, then the judge can make an order that will protect the value of that business by prohibiting the other spouse from directly competing against it – a non-compete agreement.
Of course, such an order has to be reasonable and no broader than necessary to protect the good will, which means that the non-compete can’t be so strict and over reaching that it prohibits the ex from making a living.
This case is a first of its kind in Massachusetts and some divorce lawyers find the decision shocking. However, if you’re awarded the family business in a divorce, you’ll be happy to know that it’s possible to prevent the ex from opening up right next door to you.
Before the end of 2011, 20% of judges in the Massachusetts Probate Court will be stepping down. Massachusetts Lawyers Weekly reports.
So what does this mean for my business?
With significantly less Probate Court judges, the Probate process will slow down dramatically, leaving your business in probate, following your death, for an extended period of time and in the hands of the remaining overwhelmed judges.
How do I pass down my business without being affected by the Probate Court?
Set up a Trust! Setting up a trust is the safest way to make sure your business is passed on in an orderly fashion.
Why a Trust and not a Will?
A Will “comes to life” when you die and passes your business on through the Probate Court System. A Trust, or “living trust,” “comes to life” when still alive and after your death while avoiding Probate Court.
Who can help me set up a trust to protect my business? We can! At Phillips Garcia Law we specialize in protecting business owners by helping them legally pass down their business in the safest and most precise way possible. Contact us using the Contact Form, call us at 508-998-0800, or email us at firstname.lastname@example.org. As always, you can find out more information on protecting your family and creating Trusts at our website, www.phillipsgarcia.com.