19th May 2021
There are numerous headlines at the moment speculating over the high-profile divorces of Bill & Melinda Gates and Jeff & Mackenzie Bezos. Divorce for the super-rich and famous can play out rather differently (and of course publicly) compared to those out of the public eye. But when a business is involved in the separation, it is vital to seek specialist advice.
Businessmen Bill Gates and Jeff Bezos, two of the richest entrepreneurs in the world, will no doubt be seeking the best divorce advice they can, to protect the interests of their well-known businesses.
Whilst your business might not quite be on the same plane as Microsoft or Amazon, your business holds a great deal of personal value and needs to be handled with care and consideration when you are going through a divorce.
One of the first steps when looking to part ways is to get together a clear picture of your assets and finances. The business would be included in this and may need to be valued by an independent expert. It is important that the business is not under or overvalued as this could impact your divorce settlement so the early input of the business accountant will greatly assist.
You will be expected to provide detailed information about your business, this may include your business accounts, tax returns, budgets, account forecasts etc.
On top of your concerns for protecting the business, it is also important to take care of yourself as you navigate divorce so that you can continue to run your business effectively. Divorce can be stressful, and it can make running a business successfully a challenge, particularly if your spouse is also working in the business. Try to separate your home life as much as possible.
In England and Wales any business interests and the value contained in them can generally be considered as one of the ‘matrimonial assets’ to be divided on divorce or dissolution.
How, exactly, the business will be treated when dividing assets will be different depending on how the business is owned and its value. The courts will take into consideration whether it is a family business or whether it solely belongs to one party, who is actively involved in the business, whether the business generates a profit and has provided an income for both parties throughout the marriage, the business value, its purpose and structure, liquidity, the length of the marriage and the other non-business assets involved in the marriage.
It is often the case that one spouse will seek to retain the business and for the other spouse to be compensated from the other assets (such as properties, investments or cash). However, it is unusual for one party to be left only with assets tied up in a business without any other money or assets to live off.
It would be rare for a court to order the sale of a business as a result of divorce especially if doing so would remove the family’s income. However, the court does have the power to do so if necessary.
Every case is different, and it can be a complex area to reach agreement on, particularly when dealing with a family business, inherited business interests or jointly owned assets. It is often helpful to seek the input of the business accountant, and potentially an independent expert business valuer if proportionate to do so.
If you are already going through a separation, then it may be too late to shield your business entirely from the impact of your divorce. The best way to add peace of mind and to ring-fence your business or business assets from your relationship is to enter into a pre-nuptial agreement or a post-nuptial agreement. This keeps your business separate from your relationship and clearly sets out what would happen in the event of a separation or divorce. It is also advisable to seek specialist advice from an accountant or business adviser on the structure and set up of your business from the start.
If it is too late for any forward planning, then it is best to seek advice from a Family & Divorce Solicitor with experience representing business owners or entrepreneurs with their separation. They will be able to advise you which route to take and assist you with the negotiation and litigation required should a dispute over division of assets arise.
When going through any separation it is important to get straightforward and sensible advice from someone who understands your concerns and what is important to you.
Your divorce solicitor works alongside you to support you through the legal aspects of divorce and ensures that they do all they can to achieve the best outcome for you, your children and your business.
To speak to a specialist divorce lawyer about separation and the impact on your business, please contact Rob Parker, Partner and Head of Family Law on 01256 844888. Alternatively, you can email Rob directly at email@example.com or speak to our online chat assistant who can take your details and arrange for a call back.
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The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.
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