What Happens to the Family Business in Divorce?
When you’re getting a divorce, all of your assets will be taken into account when sorting out your finances. This includes the value of the family business, which is considered to be a ‘matrimonial asset’.
All of your matrimonial assets need to be divided fairly between you and your former partner. This doesn’t always mean taking 50% of everything, but is based on your individual circumstances.
If one of you decides that you don’t want to take any part of the family business, then you don’t have to. But just because you may be more involved in the business than your former partner, it doesn’t mean they’re not entitled to a part of it as well.
We know that dividing all of your shared assets in divorce can be stressful and can cause a lot of animosity between you.
Our Divorce Solicitors are experts at reducing conflict in separation and we can advise you on the fairest way to divide your assets amicably in divorce.
Can I Claim a Share of my Partner’s Business in Divorce?
Yes, it’s likely you can claim a share of the business even if you’re not necessarily that involved in it. When dividing any of your assets, the Court will consider:
- Your earning capacity
- Your role in the marriage or civil partnership
- The length of your marriage or civil partnership and your age
- Whether you’re the primary carer of any children you may have
- Your respective financial needs
How Much of the Business am I Entitled to?
The business needs to be valued to determine how much each of you are entitled to. Again, this will depend on a number of things.
How is the Business Valued in Divorce?
If you have shared business interests, either of you can arrange a valuation.
If just one of you owns the business, then it’s best to have the business valued by an accountant who should be instructed by both of you to complete a formal valuation.
The value will depend on:
- The business’s assets, such as buildings and stock owned
- Its earnings and the structure
- Whether it’s a limited company, sole trader or partnership
What if I Don’t Agree with the Value?
If you don’t agree with the valuation that your former partner has provided, you can apply to the Court to get a formal valuation. Once the joint accountant has valued the business, they will let you know what the basis of their valuation is.
In most cases, the business interest will stay with the person who runs the business day to day, and the other divorcee will get a larger share of the other marital assets, or a structured settlement where you may be paid in instalments.
By compromising in this way, you can avoid the sale of a business and a loss of income for you as a business owner.
You should always get independent legal advice when considering a separation and it’s so important that assets are properly valued to make sure it’s a fair split. There will usually be Capital Gains Tax considerations to think about so the timing of the separation can be crucial.
Every business is different and so is every divorce. Our specialist Divorce Solicitors can advise you on a fair financial settlement based on your circumstances so that you get the right outcome for you and your family. Get in touch today.
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