Attorney
During World War II, the people working on the Manhattan Project out at Los Alamos got the information their work required, and nothing more. The point wasn’t to hide the truth from those who needed it. The point was to make sure sensitive information went only where it served a purpose, and stayed out of the hands of those who should not have it.
That principle is a useful way to think about confidential business information in a New Mexico divorce. If you own a family business, your spouse is entitled to a full and honest picture of what the business and other complex or high-value assets are worth. Your competitors, your staff, and the public are not. The goal is to get the right information to the right people for the right reason, and to keep it from traveling any further.
What Has to Be Disclosed
New Mexico is a community property state, which means a business built during the marriage is generally part of the marital estate. The value of the marital estate must be divided 50/50 for a divorce to be finalized.
Figuring out how much the business is worth, and how much of that value is part of the marital estate means opening up the books and any other records that show what assets and debts it has, when it was founded, how much it has grown, and where money generated by the business went over the years.
Consider a family-owned manufacturing facility in Albuquerque with less than 100 employees. One spouse runs it day to day after inheriting it from their parents. The other kept the books in the early years, then stepped back to raise the children. Both have a stake in the business, and both will walk away from the marriage with 50% of the value of the business that is considered marital property. In order to figure out how much that is, a lot of detailed financial records are going to be pulled into the divorce. So too are records that explain how ownership of the business was transferred from one generation to the next, and information about how the business operates today. But the company’s files also hold information that should never need to leave the building.
A Need-to-Know Basis
While a great deal of financial information and detail about business operations will need to be shared between both spouses, their attorneys, and any other professionals that are helping finalize the divorce (think financial planner, accountant, valuation experts, etc.), disclosure typically doesn’t have to go further than that. Client lists, contract terms, bid formulas, vendor pricing, and proprietary processes can usually be shielded.
Going back to the example company above, a valuation expert may need to know how much revenue comes from the top ten customers, but not who those customers are. Payroll can be summarized or redacted to protect employee information and details about when and how much people are working for you. Unique methods of doing business may be protected as trade secrets.
Divorcing With Privacy in Mind
If you and your soon-to-be-former spouse are committed to keeping things quiet, you can hammer out the details of your split behind closed doors. Basic negotiation as well as the more formal mediation and collaborative divorce let spouses exchange information in private sessions. The only thing that becomes a public record (meaning your competitors, clients, or the general public can access it) is the fact that you filed for divorce and the court approved that request.
If you want additional protection against your private information being shared, your divorce settlement can then include confidentiality and non-disparagement provisions. These have the force of law behind them, so if a violation occurs, you can ask the court to step in and enforce the original terms or even award damages to compensate you for injury caused by the violation.
It may also be possible to put non-compete or non-solicitation terms in your divorce settlement if it is necessary to do so to protect your business. These must be narrowly tailored so that the departing spouse is still able to make a living, but they are something worth considering.
Serving Families with Dignity & Compassion
As a former business owner whose experience with the divorce process inspired him to switch careers and become the attorney he wishes he would have had, Bob Matteucci is committed to helping business owners in the Albuquerque area successfully navigate the divorce process.
Rather than going nuclear, Bob and the rest of the Matteucci Family Law team are ready to help you discretely and efficiently part ways with your spouse. They will work hard to ensure you, your former spouse, and the business you built, are on a firm foundation post-divorce.
Please contact Bob today to set up a meeting and discuss your case.