A family business will differ significantly from the treatment of other assets that are valued and shared during a divorce settlement. The business often provides the family with a certain standard of living and the business and financial security of both spouses can be put at risk if matters are not handled in the right way.
We cannot stress enough how important it is to seek urgent legal advice whenever a family business is involved in a divorce settlement.
We can’t cover every challenge and pitfall in this article but these are some common questions we hear from clients.
Do I have a right to a share of the family business when we divorce?
Business interests are considered along with other marital assets such as the family home, even if the business was started before marriage and even if it is not in joint names. The courts will not necessarily grant a greater share to the party responsible for building the business up. Credit may be given to a spouse who looked after the home and children to allow the other to devote more time to the family business.
Our role is to make sure the division of business interests is fair and reasonable. We prefer, where possible, to agree a settlement out of court because once the case is in front of a judge it can be very difficult to control the outcome. The court may even order the business to be sold and the capital split.
Once we know your precise circumstances and personal priorities we will be able to discuss the options with you in detail and help you achieve the best possible outcome.
How can I sustain myself financially if my career has been within my husband’s business?
When a husband and wife have been working in a business together, divorce can affect both their future earnings. A key concern will be whether it is feasible for one of them to continue running the business and if enough capital is available to “buy out” the other.
In such situations our technical knowledge allows us to conduct careful and informed negotiations in order to agree a fair settlement for everyone involved. This might mean one partner retains ownership and pays the other spousal maintenance, or that borrowings are used to create a lump sum payment. There are a number of possibilities and we can talk these through with you.
How can I protect my family’s business from divorce?
Divorce can have implications for other members of the family who are involved in running the business. Their priority, and ours, will be to ensure the business itself is not affected. This might involve using other assets for a settlement in order to protect the business, or agreeing stepped payments from the business to protect cash flow and enable it to continue trading effectively. There are a number of options.
To find out how we can help you protect your family’s business give us a call today on 01423 594680.
Andrew Meehan is an experienced family lawyer specialising in complex divorces involving significant or hidden assets, as well as cases involving children.
He is recommended for family law by both Chambers 2018 (York, Hull and surrounding regions) and the Legal 500 2017 (Leeds/West Yorkshire and North Yorkshire region).
Everyone’s circumstances are different and this article is provided by way of general information only and must not be replied upon. If you require legal advice on a family law issue, please feel free to contact us by emailing enquiries@harrogatefamilylaw.co.uk.
