What future for business after divorce?

DURING the festive season we should remember that enormous strain can be put on relationships, sometimes leading them to breakdown.

This can lead to uncertainty about managing future finances.

But can a business be shared as part of a divorce settlement?

Where the business produces just an income, the court may be more inclined to keep it in tact with a claim being made for a share of the income generated instead.

Where spouses are in business together as directors of a company or in partnership, one spouse could have the option of buying out the other or breaking down the business into separate entities.

The court’s starting point is valuing the business to better inform the decisions made about an appropriate financial settlement on divorce when reviewing other assets such as property, income, investments and pensions.

If a valuation is not agreed, the court can order the joint instruction at joint cost of an independent business valuation report.

Tax advice should also be sought when a business valuation is undertaken.

The time, effort and cost of valuing a business should always be balanced against the size of the interest, a 55 per cent interest in a business will be more relevant than five per cent depending upon what the business is.

Investing in legal advice from a solicitor will help you decide the best course of action and by speaking to me you can be assured that you will receive bespoke advice to help you make an informed decision. Hannah Bridgwood, Associate, Family Team at Clarke Willmott LLP Tel: 0345 209 1698 Email: hannah.bridgwood@ clarkewillmott.com Website: clarkewillmott.com