facebooK twitter linkedin rss

Business & Divorce

How a divorce may impact your Business

Mark Hagyard

Mark Hagyard

Mark Hagyard is an experienced Family Lawyer who provides no nonsense straightforward legal advice to all of his clients. He has many years of dealing with corporate and family law cases.

His particularly expertise is dealing with clients who have concerns relating to their financial assets and/or successful businesses when faced with relationship breakdowns.

Mark has provided some basic information on this page about the things to consider if you are going through or considering a divorce.

 

Do you own a business?

  • If you own a business then it will form part of the assets that will be shared out if you are getting divorced.
  • It is the Family Courts not the Commercial Courts that deal with how the business assets will be shared including a trading firm, a company or a partnership.
  • Any business or business interests that hold a value will be included in any financial disclosures relating to the divorce.
  • Business valuations are extremely difficult and subject to personal and expert opinions. The danger is always that an unrealistic value (whether under or over) is placed upon the business and this can lead to prolonged expensive litigation.

 

What should I do first?

  • Think carefully about what you want for the business now and in the future:
    • As a business owner you need to consider what you need to do to protect the business and how it will continue if a settlement is awarded in the courts.
    • If you are not a business owner but feel you have a claim against one then you need to consider how you can be awarded a fair share without damaging the ability of the firm to continue.
    • If the business is a farm then this can be far more complicated and you need to speak to someone who has the right legal expertise to guide you.
  • Take the time to find a Family Lawyer with experience and a good success rate of dealing with divorces that include a business element.
  • Also take the time to find an accountant with the experience and expertise to assess your business.
  • Any financial settlement should take into account the needs and objectives of you and the business.

 

How is a business dealt with in the Family Courts?

  • The family courts will tend to leave the owner with the business, where possible, and compensate the spouse with a larger share of the other assets and/or maintenance.
  • As with any resolution there are difficulties in determining whether this is the fairest approach as there are no guarantees that the business will continue to do well or provide the same level of income in the future (the reverse is also possible of course).
  • There is the possibility that the Court could decide to share the income or divide the shares. They may also decide to split the assets on the basis of the liquid e.g. cash to one party and the illiquid e.g. stock, buildings to the other.

 

How to assess your business?

  • What level of income does the business produce?
  • Does the business support a certain standard of living?
  • What assets does the business own?
    • Do any of the assets have a significant value?
  • Is there a company or business pension?
    •  If so, what value does that have?
    • Consider savings, property and/or shares.
  • Can any capital sums be withdrawn from the business?
  • Can funds/finance be obtained secured against the business or its assets?
  • Is the ownership of the business shared?
    • Would the other owners agree to assist financially or where security is required to borrow against the business?

 

Do all businesses have a value?

  • It depends entirely on the type of business. If the business has no capital value i.e. there are no assets that can be sold as part of the settlement then the only thing that can be taken into account is the income that the business produces. If this is the case then the income will often be shared via a Maintenance Order.

 

Will the business have to be sold?

  • It is very unusual for the Family Courts to order a business to be sold.
  • The more likely solution is for the spouse to be awarded more cash or property that is not part of the business e.g. the family home. In addition the Court may consider awarding maintenance to be paid from the income stream of the business.

 

 

Who owns the business?

  • If it is by you or you and your spouse, then the courts will be more likely to treat this like any other family asset.
  • Where it is  several people including you, then it will depend upon whether your spouse has a shareholding in the business. It is unlikely that the court would ask for the sale of assets or the release of capital as this would be deemed unfair to the other business owners.

 

Next steps…

  • Do not make any rash decisions about the business that will be perceived to be obstructive by the court e.g. taking out additional borrowings to reduce its value.
  • Consider any sensible steps that can be taken to protect the business and reduce the risk of financial damage to it.
  • It is important to take independent legal advice from a specialist family lawyer as soon as possible:
    • Seek out someone with expertise in dealing with high value divorces and divorces where businesses are involved.
    • Most good solicitors offer a free initial enquiry to give you the opportunity to decide if they are the right lawyer for you.
    • Ask locally for recommendations.
    • Consider some of the questions provided here as a starting point as you are likely to be asked about these in any initial fact finding exercise.

 

Free Initial Enquiry

Mark would be delighted to explain how he can help you. For your free, initial enquiry, please: