Treatment of Business Interests on Divorce
29 March 2021
Going through a divorce is often a stressful and difficult process. The process often becomes more complicated when there is a business to consider. MKB Law’s Family Law team have combined experience of over 30 years in dealing with the division of matrimonial assets. We can advise you on how a business asset can be treated on divorce. We have a team of experts that include accountants, forensic accountants and tax advisors who can assist with valuing the business and advising how it can be turned into a lump sum to satisfy the non-business owners entitlements.
If one spouse owns a business, or has a significant shareholding in a business, then the starting point is to have the business valued. The Court’s encourage a single joint expert to be instructed to mitigate against extensive costs. This is usually carried out by an independent forensic accountant. If the business owns property, that property will also be valued separately. The starting point to value a business, is to obtain full and frank discovery to enable the expert to carry out their valuation. The discovery, which will include accounts and tax returns, must be exchanged to inform the expert.
In most cases, the parties will want a clean break agreement and no further ties to the business. However, how the business will be dealt with during the divorce will be dependent on the individual circumstances of each case.
Examples of how the Courts may deal with a family business:
One spouse retains the business and the other spouse is compensated with a lump sum payment from other matrimonial assets
Both spouses are made shareholders
Sell the business or shares
Transfer shares from one spouse to another spouse
If you would like more information on what your entitlements are on divorce or if you want to know how to preserve the business after divorce, please contact our team below.