Divorce and business – must it spell disaster?
If you are going through a divorce and want to keep control of your business, there are some useful steps to take in order to protect your finances and business. We look at some of the ways in which you can assuage the prospect of a disastrous divorce.
Financial considerations at a glance
If there are children involved in your divorce their financial welfare will take priority in the eyes of the courts. Other criteria courts consider are the age of the divorcing parties, how long the marriage lasted, the financial resources of both and any health problems that may exist. The ultimate objective of the UK courts is to find a ‘fair’ and equitable solution for all parties.
Businesses will be brought into the equation as they are considered a financial asset. Irrespective of company structure (whether you are a sole trader, a limited company or a partnership) your business is same in the eyes of the court when dividing assets as fairly as possible.
How to make the prospect of divorcing easier if you have a business
Going through a divorce of any kind is stressful and it can be even more so if you have a business of your own to consider.
Here are some ways in which you can survive a divorce with a business to think about:
- In any divorce, anxiety can be removed if you are able to agree on a settlement with your divorcing partner. Ahead of your divorce, you may want to discuss how you can divide assets so both parties are pleased with the outcome. This could be, in some cases, allowing your ex to keep the business while you have a greater share of another financial asset. Or perhaps, if you own the business, you can make periodical payments or a lump sum to your ex-partner so you do not have to sell the company to divide assets. It is important to consider things carefully at this stage though and make sure you are thoroughly happy and have considered all eventualities before agreeing anything.
- Communicating well with your partner is one of the most useful ways of reaching a decision on finances that both parties are relatively happy with. When there is a business involved, being transparent is also key. For example, it is not advisable to try to make things better for you and your business by trying to hide funds or assets, or by changing the model of your business to reduce or remove a potential financial implication ahead of a divorce. This will not be looked on favourably by the courts.
- Working with an independent financial advisor who specialises in divorce-related finances is always beneficial, especially if you are not able to agree on a settlement with your ex-spouse. It’s advisable to find a professional appointed jointly by both parties. This person will be able to value your business so everyone is clear on the finances involved. This may involve comparing the market value with other similar businesses to yours, and what prospective purchasers would be happy to pay for it. Along with up-to-date financial business records, doing this can help accelerate proceedings.
- If you do not have a prenuptial agreement in place, then, depending on the level of amicability with your and your ex-partner, you should consider getting a post-nuptial agreement. In this agreement you can specify what would happen to finances in the event of a divorce and it can help provide greater certainty to both parties.
Finally, a family lawyer with a track record in divorce can make a significant difference when there is a business involved, so it’s worth researching those in your area.