Divorce can be a stressful and complicated affair when dividing a couple's personal assets. However this becomes more complex when one of the couple owns their own business. Did you know that in certain circumstances a spouse is entitled to a share of the assets owned by their partners business? If you are in this situation and seeking a divorce then you should obtain professional legal advice from a divorce solicitor.
The main aim when dividing a couple's family assets is that the division is done in light of each spouse's contribution. Nevertheless, when it comes to business assets the courts have demonstrated a reliance on the precedent of a 50/50 split between spouses.
When dealing with business assets, the court can award a 50/50 split irrelevant of contribution to the business itself. This is a frequent occurrence where one spouse works and the remains at home. It is assumed by the court that the homemaker party has scarified their career on the basis of financial security received from the business assets in question. Not only this, but the non working party is assumed to have supported the working party in their business ventures.
In situations such as this, the court will not necessarily enforce a sale of the business to fulfil the conditions of the split. If the business is providing a suitable income, big enough to support the ex-spouse and any family involved, then maintenance money will be sought instead. Selling individual assets from the business whilst keeping it as a going concern can fulfill the claims of a divorce.
How does the court achieve a settlement?
You should obtain a current valuation of the business assets so that the court is able to negotiate a settlement. This valuation will need to demonstrate more than just the current balance on the books; it will have to show profitability of the business and it's potential future earnings. The valuation of the business should be done both as a going concern and what it would make if it were to be liquidated. The court will use this information in connection with all the usual factors it considers during divorce proceedings.
Upon receiving a valuation for the assets the parties should embark upon negotiations before the matter appears in court. Such negotiations can happen via mediation or collaborative law. Decisions reached in this way can save parties large sums on legal costs and court fees.
How can I avoid losing my business assets upon divorce?
If you have your own business prior to getting married then you should consider forming a prenuptial agreement.
However, if the process of creating your business occurred during your marriage there are certain actions that you can take to ensure that each party's rights are defined. Examples of these methods include forming a discretionary trust or drafting a shareholder agreement. These agreements can include directions to how business assets will be divided upon divorce.
If you are considering implementing any of the above protective measures, it is always advisable to seek legal advice from specialist divorce solicitors prior to taking any action.