Posted by Shreya Kallingal on 20th October 2023
Last updated 12th December 2023
Is My Spouse Entitled to Half of My Business?

We understand that considering a divorce can be a stressful time, especially when you have a business to think about. In this article, divorce lawyer  Shreya Kallingal addresses some of the most pressing issues for consideration regarding divorce and business assets.

Determining Business Value

In many divorce cases, the true value of the business becomes a point of contention. Ensuring an accurate and fair valuation is crucial. The valuation approach may vary depending on the structure and profits of your business, among other factors.

At The Family Law Company, we work closely with our tested network of accountants who specialise in business valuations, particularly understanding the intricate relationships between business and tax structures in divorce cases.

Inclusion of Business Assets in Divorce Settlement

Contrary to popular belief, your business will indeed be considered an asset in a divorce. Various elements such as the business type, its longevity, and your spouse’s involvement will influence how significantly it features in the financial settlement.

Business Structure and Ownership

The way your business is structured will affect how assets are considered:

  • Sole traders own all business assets individually.
  • In a partnership, assets are co-owned according to a partnership agreement.
  • In a limited company, the company itself owns the assets.

Business Valuation Methods

Valuation is typically based on one or more of the following:

  • Business assets: Particularly relevant for asset-heavy businesses like real estate or manufacturing.
  • Trading pattern: Historical trading profits and estimated future growth are considered.
  • Business income: Particularly relevant for skill-based businesses, where income may be significant, but tangible assets are minimal.

Our expert panel can guide you in choosing the most appropriate valuation method for your situation.

Protecting Your Business

Courts usually prefer to leave business structures unaffected, prioritizing their ongoing viability. While this is good news for business owners, it might still necessitate finding alternative assets to satisfy your spouse’s financial entitlement. Early legal consultation provides the best strategies for business protection.

Pre-existing Businesses

If your business predates your marriage, may impact whether your business is considered a matrimonial asset. However, any growth that occurred during the marriage will likely be subject to division. Much will depend upon how long your marriage is and what your needs are particularly whether your needs can be met without recourse to the pre acquired asset.

Freezing Orders to Prevent Asset Devaluation

If you suspect your spouse might devalue assets, a freezing order can be a proactive measure to prevent this. These court injunctions restrict your spouse from dealing with their assets and are granted when there’s substantial risk of asset devaluation or disposal.

If you’re navigating through a divorce and business assets are a significant concern, we’re here to offer the expertise you need. With The Family Law Company, you have over 30 years of specialist expertise and can be assured of skilled advice that aims to protect your interests and maintain the integrity of your business.

Need some advice? Get in touch today

Shreya Kallingal is a Solicitor at The Family Law Company. Dual-qualified she has experience as a Lawyer in India, Her academic study of comparative law and experience in dealing with multi-jurisdictional cases has equipped her to deal with the challenges of cross-border work.

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