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This article was published on March 18th, 2021
Do you know how to protect your business during a divorce?
Your spouse might be entitled to a share in the company, even if they have not been involved in the day to day activities of the business. The courts when considering a “fair” distribution of the assets will take into account all the assets, unless there is a legal document to say otherwise.
Dealing with a business can raise complex issues, starting with its valuation, the income it produces and the assets. There can be third party interests with other partners or shareholders to factor in.
Partnerships are usually income streams but if owned outright then a valuation may be necessary and usually involves the appointment of an independent (Single Joint expert) Accountant to value the business.
A husband and wife might own shares, a decision taken for tax benefits, and may not reflect the daily running of the business, but it may be necessary to transfer the shares on divorce when reaching an agreement. An expert may need to value the shares in the business to achieve this.
With different types of businesses, it is knowing when it is necessary to have a business valued and the type of process necessary to establish its value.
The business on divorce is usually treated as a matrimonial asset to be distributed between the parties and given the complexity, it is advantageous to obtain legal advice from an experienced family solicitor
You may be able to protect the business with a Pre-nuptial or post-nuptial agreement to limit future claims. Whilst not romantic to have those discussions with your partner it can help to protect the business should the marriage subsequently end in divorce. It isn’t just about protecting the owners of the business but those it employs, investors, customers and clients.
A Pre-nuptial or post-nuptial agreement is a written contract that will typically list all of the property, assets and business assets that each party owns and what they intend to happen should their marriage come to an end. As it stands currently in the UK they are not automatically legally binding but can be upheld by the Court if it meets the qualifying criteria. It is therefore important to ensure that you seek specialist advice to ensure that the document is correctly drafted and does meet the criteria.
If you would like further advice on how to protect your business during a divorce or any other family law matter, please don’t hesitate to contact our team. Call 0800 1979 345 today or complete our online enquiry form by clicking here.