Protecting your business assets during divorce – expert advice from Peter Lynn & Partners
Divorce is a difficult time for everyone involved, and business people are just as prone to divorce as the rest of society. Crucial decisions have to be made in all areas of life, and proceedings become more arduous when commercial assets are held and valued.
Businesses can be the most valuable asset you have, and after countless hours spent growing and nurturing your own company, divorce can offer a devastating blow. The impact of divorce on business can result in vastly differing financial consequences, and getting the best legal advice is the key to protecting your wider interests.
Valuation of business assets
Determining the value of a business is an integral step during a divorce, and it is recommended that you seek professional advice regarding valuation. Valuation is an art, not a science, and the valuation of a business can often mean thousands if not millions of pounds are added to a financial settlement award, so exercising diligent during this stage is essential.
Separate and marital assets
Many business owners see commercial assets crudely dealt with by many family lawyers, who simply do not have the expertise to effectively handle separate and marital property.
Whilst a nuptial agreement and limiting spousal involvement in a business are steps that should be taken to protect commercial assets, the majority see taking these precautions as tempting fate. Courts will, where possible, leave the business owner with the business and aim to compensate the partner for any assets or maintenance, but what happens if you have both put plenty of blood, sweat and tears into building it?
Dissolving business partnerships
By entering a ‘partnership at will’ agreement, you and your partner can agree appropriate terms should one of you wish to leave the business. This partnership can be dissolved at any time by giving notice, however, if one partner wishes to carry on trading then share values must be reassessed. The valuation of a partnership share is complicated and it is essential that you seek legal advice to ensure the correct entitlement is received and further legal disputes are prevented.
Whether just yourself or both of you work in a partnership, seeking advice in the early stages of the divorce is key, and will ensure business assets that are at stake and tax considerations are dealt with professionally.