Please take a moment to read this if you are leaving your spouse or civil partner, and one of you owns a business.
Please share this with anyone you know who is going through the same thing, particularly if you, or they, think, “I have spent years building up my business, I don’t want it all destroyed by this divorce.”
When all is going well, there is no problem. One spouse (or civil partner) will set to work developing a business. Sometimes their ‘other half’ works in that business. The idea is to provide for a growing family, provide the better things in life, and even provide for retirement. But then comes separation. The couple want different things out of life. The partner for whom the business was their “project” might think, “I don’t want to throw away everything I have sweated over, for all these years.” But their spouse might thing “I am vulnerable. My earning capacity is limited. I need to get enough out of this family business, to make me and the children comfortable.”
If that is your business, or your friend’s or relative’s business – what should you do?
Firstly: Don’t be evasive. Don’t look like you are hiding things. If your spouse thinks that you are hiding things, increased legal action may follow. Courts can set aside, transfers of assets designed to make it look like you own nothing. Let us be clear – more legal action means more costs, more stress, and more time without your energy focused on the business.
Next: Don’t assume that in The Family Court, being argumentative is a good strategy. There is a legal duty to negotiate. So why not collaborate from the very start? Why not engage a Collaborative Lawyer and ask your spouse to do that too? It is amazing how much progress two lawyers and two clients can make, around the same table, over a series of relatively civil / business-like meetings.
Remember: The Family Court is extremely flexible. So if your ex thinks, they will inevitably get “half of the business”, they are mistaken. In long relationships The Family Court will often ask “why shouldn’t we decide the family’s assets equally?”. However; it would be rare if the business was the only family asset. There may be pensions, cars, rental properties and of course the family home.
Finding out what you each have is called “disclosure”. People that settle before full disclosure has been considered often live to regret it (when they later find out that they could have done better). Part of disclosure means valuing the assets. We all know that a surveyor can do a valuation report to tell you what your house is worth. Businesses can be valued too. Accountants, sales agents and commercial surveyors can all be called on to do a (joint) report. You and your ex would instruct those experts jointly. You won’t have an expert each, arguing that they are right until you are all blue in the face.
When you have worked out what the family’s assets are, remember that a judge can still depart from 50/50. He or she can say “party A has greater needs, poorer health, more parenting duties and a lower earning capacity than party B, so party A should have more of the capital.” And increasingly, spouses will sign up to a “nuptial agreement” at or after the time of their marriage. Often a divorce judge will say “I am going to more or less keep to the terms of the nuptial agreement and not vary the outcome too much.”
You may be worrying “what about my future profits?” They aren’t automatically shared . But:
- they could affect how the capital overall is divided – e.g. if you are forecast to make great future profits your ex may get a greater share of capital;
- if (child) maintenance is to be paid, that can be paid out of future profits; and
- if your current cash flow is poor, but your future is predicted to be bright, you can offer to give your ex a set percentage of the future profits, because you have less capital to share now.
One final tip: In the business world, you are probably very good at making decisions analytically, based on the costs verses the benefits of a particular step. In your own divorce, emotions can creep in and people sometimes end up arguing, because they want to lash out. Don’t choose a lawyer, who seems keen to help you lash out and be angry. Choose a lawyer who understands the importance of remaining “business like”, all through the heightened emotions that a divorce can bring you.
How Hopkins Solicitors Can Help You
For more information on either collaborative law or the issues raised in this article, please contact David Winnett in our Nottingham office on 0115 9068 078 or email him directly at firstname.lastname@example.org
Alternatively our Family Law Team are also located across our Nottinghamshire offices in Mansfield, Sutton and Kirkby and can be contacted on 01623468468 or via the web enquiry form below.Request a Callback
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