How to Handle the Family Business in the Event of a Relationship Breakdown
In the unfortunate event of a relationship breakdown and eventual divorce, there will be a lot for you and your spouse to consider. One factor that you will have to take into account is the division of any family businesses that either or both of you may own or hold shares in.
Such enterprises will form part of the assets that will have to be distributed between you, and it is likely that these will need to be valued as part of the financial disclosure aspect of the proceedings.
So that you can better understand how such a scenario works, we’ve created this brief guide to assist you…
How to Start
Before the divorce proceedings really begin to progress, it’s important for those with a family business to consider what they want to get out of it, so enlisting a specialist family lawyer is the best place to start.
This professional will be able to help you not only decide on attainable objectives and an appropriate end goal, but also the ways in which you can achieve these, irrespective of whether you’re the business owner or the less involved spouse.
How Courts Assess Family Businesses
As a rule, UK courts will usually aim to leave the business in the hands of the original owner, whilst compensating the other spouse with either the lion’s share of other assets or a fair maintenance deal.
In most cases, this is what the couple themselves will seek, but where this is not the case, there is certainly room for manoeuvre. Each case will thus be assessed on its individual merits before a final decision is reached.
How Do I Claim a Fair Share
Irrespective of whether you’re the business owner or the other spouse, the best way to achieve a settlement that you feel is fair is to be clear about what you want from it. That’s why we advise asking yourself the following questions and discussing your answers to these with your lawyer.
- What income is produced and how much of this do you feel you should be entitled to?
- What standard of living does the business support and how could it be divided in a way that continues this?
- Does the business have property or assets attached that increase its value and how can your share in these be quantified?
- Is there a company or business pension that has value in terms of savings, properties, or shares and how much of this should you be due?
- Can capital feasibly be extracted from the business to provide funds for housing without damaging it?
- Is it feasible to borrow against the business?