Business & Divorce

How a divorce may impact your Business

Our Family Law team provide no nonsense straightforward legal advice.

They have expertise in dealing with clients who have concerns relating to their financial assets and businesses when faced with relationship breakdowns.

Below are things to consider if you are going through or considering a divorce.

Our Family Law Team can provide the right kind of legal support when you need it most.

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.
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. This can lead to prolonged expensive litigation.

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 solicitor or 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.

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. 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 non-liquid e.g. stock, buildings to the other.

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 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 solicitor or 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.

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