11 July 2008
Divorce and the family business
It is not uncommon in a marital breakdown for a business to be one of the assets that has been built up during the marriage and this needs to be taken into account in the overall settlement.
One spouse may have been engaged in the venture either alone or with others or alternatively both spouses may have built up the business together. Furthermore, a spouse may have shares or be on the payroll but have taken no active part in the venture.
Complex and challenging issues can therefore arise where a business is at the heart of the family’s income and assets involving not only family law but also company, partnership, employment and tax law. All these areas are fully covered by Hart Brown’s experienced team of lawyers.
The business is invariably the income-producing asset. Business performance may be affected by marital breakdown. If it’s a joint venture, can both spouses work together? It may be necessary to implement steps to ensure the continued running of the business.
In addition, it is essential that a realistic picture be obtained as to the real level of renumeration from the business and its liquidity and value. Such reports can be expensive and the spouses and their legal advisors must ensure that costs are in proportion to the value and issues in hand.
If the business has substantial assets which can be utilised in a settlement without affecting its liquidity, then it may be necessary to look at how assets can be withdrawn in the most tax-efficient way. Again, an expert can be called upon to comment.
Equally, if one spouse is agreeable to transferring their shares to the other, then expert advice is required as to the value of those shares and the most tax-effective way of transferring them.
Where one spouse has been employed by the other they will have employment rights which must be taken into account and not be breached.
Ideally spouses and their legal advisors should work together, with the assistance of the joint accountancy expert, to achieve a settlement which is fair and enables both parties to move forward with their lives.
For this reason many clients prefer the collaborative approach, whereby both spouses sit down with their advisors to find solutions together to the various issues which arise on the breakdown of their relationship. At Hart Brown we are able to offer this option to resolve issues.
For further information contact Sharon Powell on 01483 887541.