The circumstances surrounding marriage breakdown are always different and the financial factors considered in divorce settlements vary. If you own a business, be it a partnership, limited company or if you operate on a sole-trader basis, it is likely that this will be treated in a similar way to the marital home, savings and pensions and included within your ‘marital pot’. The business will therefore be subject to the question of how the value is to be distributed upon divorce.
As a solicitor specialising in divorce, I am regularly instructed by business people and high net worth individuals in respect of divorce proceedings and separation. When dealing with business owners, protecting the interests of the business that so much time and effort has been devoted to building, is naturally most often of significant importance.
Seeking family law advice at the outset is vital for it will allow people to be proactive in their approach to managing a difficult situation and will give them a progressive way forward to resolve their difficulties within a timeframe that is generally not inconsistent with the interests of the business. Business owners should seek advice from a solicitor experienced in representing entrepreneurs and business people as the complex financial issues involved require specialist advice.
An approach to and establishing a good working relationship with the business’ accountants at an early stage is key to identifying the value of a business and its liquidity so that informed decisions can be made as to how the business should be treated within divorce proceedings. The Court is likely to avoid enforcing a business sale in all circumstances and if a pay out to your ex-spouse in relation to the business is required, there can be numerous ways for this to be funded, including coming to an agreement based upon property, capital or other assets.
In terms of business owners protecting their interests at the outset of a marriage, pre-nuptial agreements are becoming increasing popular. Where the business has been started by one or other spouse prior to their marriage, a pre nuptial agreement could set out what would happen in the event of the marriage breaking down. Such agreements are currently not binding on the Courts, but they are gaining in influence and in certain circumstances, they do carry ‘decisive weight’.
On a positive angle, divorce/relationship breakdown can actually result in business people focusing their time and energy more intensely on their work. Successful business leaders can often emerge even stronger following a divorce, with renewed drive to improve the business and increase turnover and profitability.
If you require any advice on how to protect your business interests in the case of divorce, don’t hesitate to get in touch.