Effects on your business
During a divorce or dissolution you need to understand exactly how your business could be affected, and the entitlement of both of you to the business value and assets. To help you understand the process and legal considerations, we have prepared an outline guide below:
Divorce and the business
The value of any business interest will be taken into account in a financial settlement on divorce or dissolution, whether the business was started jointly, with others or by only one of you either before or during the marriage. Some of the key issues that you will need to resolve are:
- Identifying the correct value of the business and the value of the shares in that business
- Considering the preservation of the business interest and the resulting income whilst ensuring that both of you are fairly provided for
- How to deal fairly with the business taking into account its provenance (i.e. if it was an inherited business or jointly established)
- Any likely tax implications
This area can be fraught with difficulty so it can be helpful to appoint a forensic accountant to produce a valuation report which will take into account the size of the shareholding, any tax issues and consider the question of liquidity.
How the courts resolve your claim
It is not presumed that the person who built up the business has a greater claim to the assets of the business. The family courts have a broad discretion when dealing with assets on divorce, which includes a family business. However, the value of a business cannot be realised in the same way as other assets such as bank accounts or investments. The court will therefore, where possible, try to avoid ordering a settlement which results in the sale, break up or winding up of the business as long as the business provides a source of income to both parties.
Get in touch with our team of Family Law experts today if you need advice.