Divorce is a family business
Marriage breakdown is always difficult, but it can appear doubly daunting if your husband or wife is also your business partner. A concern can be that after years of building up a successful business there might be a need for it to have to be sold. Whilst this is not necessarily the case, a divorce often does mean that a family business can be venerable. Justine Flack, Family and Collaborative Lawyer at Howes Percival LLP, answers a common question.
We are getting divorced and our settlement is complicated by both my wife and I part-owning our family business. Does the divorce mean we will have to sell the firm we have spent 20 years building up?
Not necessarily, though a divorce often does mean a family business can be vulnerable. An interest in, or outright ownership of, a business can complicate a divorce.
What the Family Court seeks to find is a fair settlement, and that includes taking business assets into account.
Since a landmark case in 2001, the Courts have sought to be fair to both husbands and wives, and that means not discriminating between them – even when one is considered the breadwinner and one the homemaker.
If the business is significant and profitable, then it may well form such a substantial part of the marriage’s assets that it may have to be divided, if possible, or even sold.
The Court has to decide how much the business is worth. It is a question which arises even when a business is being bought and sold, regardless of a divorce taking place or not.
There are many issues to weigh up when valuing a business – including fixed and liquid assets, future earnings and what role each of you plays in the company.
If it is pretty much an equal partnership, valuation can be the source of dispute.
If the business is trading profitably, then it may well be in neither of your interests for it to be sold. The Court will look at all the possibilities, but the Courts can, and do if they see no other solution, require a sale.
Seek legal advice now from a Family Law expert, and encourage your wife to do likewise if she has not done so already.
Our team of specialist lawyers at Howes Percival LLP can help you make the right decision for you.
If you wish to discuss any of these matters further, please do not hesitate to contact our Family Team on 0116 247 3596 or email firstname.lastname@example.org.
Image: Justine Flack, Family and Collaborative Lawyer at Howes Percival LLP