Business assets can be particularly challenging to deal with during divorce. Their value must be considered as part of the division of finances, however, this doesn’t mean that the business will necessarily need to be sold or its value split evenly between the separating couple. It is important to obtain expert advice at an early stage to ensure you understand your rights and options.
In this blog, we will look at the different options for dealing with business assets owned wholly by one spouse in divorce. We will also cover what you can do about a business you own jointly with your spouse.
It is important to bear in mind that this information is being shared for general informational purposes only – no two situations are exactly the same. For specific advice tailored to your situation, please get in touch and we will be happy to help.
Ways you can divide business assets wholly owned by one spouse in divorce
Offsetting the value of the business against other shared assets
One of the most common solutions is to offset the value of the business asset against other assets, such as the family home. This means that the spouse who does not own the business obtains a larger share of those other assets to compensate them for giving up their rights to a share of the business asset.
This is often the simplest solution as it means the division of finances can be fair while not impacting the business. However, it is important to obtain professional support to value the business asset or assets to make sure their value is fairly reflected in the settlement.
Paying spousal maintenance from your business income
Another common solution is for the spouse with the business assets to use their income from those assets to pay spousal maintenance to the other spouse. This, again, keeps the business assets intact while also allowing the other spouse to benefit fairly from their value. One drawback to this approach, however, is that the former spouses remain financially linked post-divorce.
Transferring shares to your spouse
Depending on the circumstances, it may make sense to transfer shares in the business to the other spouse, dividing the ownership between you. If you do follow this route, it is important to think carefully about what rights this will give the receiving spouse, what involvement they will have with the business and whether this may impact the value of the business over time.
Selling the business and dividing the proceeds
In some cases, selling the business and dividing the proceeds may be a viable option. It is important to note that a court is very unlikely ever to make an order in such terms, so this should be kept in mind even if you are negotiating a settlement out of court. Selling might make sense if the business owning spouse was considering selling anyway and/or is nearing retirement age and might have considered selling in the near future.
Dealing with a business jointly owned with your spouse
Where you and your spouse own a business together, this can be very tricky to navigate. It is important to be realistic about whether you can still work together and, if not, what solution will best provide for your future needs (and those of any children).
Common options for dealing with a jointly owned business include:
- Continuing to own and run it together (in which case, you may need to formalise your business relationship with a Partnership Agreement)
- One spouse buying the other out (in which case, you will need to have the business independently valued and think about how you will fund the purchase)
- Selling the business and splitting the proceeds (potentially the simplest solution, but often a very tough decision and the value of the business to a third party may not match your expectations)
If you find yourself in this situation, you must seek early expert legal advice to ensure you fully understand your rights and can obtain the best outcome for your interests.
Speak to our divorce solicitor in Clapham about business assets and divorce
Our divorce solicitor in Clapham will carefully listen to your circumstances and financial requirements. We can then provide clear, tailored guidance on how your or your spouse’s business assets may be dealt with in your divorce. Once we fully comprehend what you want to achieve, we can use our expertise to give you the best chance of obtaining the settlement you desire.
Our firm is headed by Donna Goodsell, a highly skilled family law solicitor with over 25 years’ experience. Donna is available to provide a highly personal service in relation to divorce settlements, including those involving business assets.
To speak to us about business assets in divorce or to arrange an initial consultation,please call
020 7622 2221, email enquiries@goodsellssolicitors.co.uk, or complete our online enquiry form to request a call back.