Posted by Lucy Theobald on 5th September 2023
Last updated 12th December 2023
Safeguarding Business Assets in Divorce

Divorce Solicitor Lucy Theobald explains some of the steps you can take to help safeguard business assets in divorce.

When navigating the complexities of divorce, business assets often present unique challenges. These assets—whether they’re part of a private company, sole trader operations, or shares in a limited company—can be considered part of the ‘matrimonial pot,’ along with other assets like your family home and pension.

Understanding the Value of Your Business

The court will need a clear understanding of your business assets’ value to make fair decisions. As part of the financial proceedings, both parties are required to offer full and frank disclosure of their assets. If you own shares in a business, you’ll need to disclose both the percentage of the shares and their value, substantiated with documentary evidence.

Company accounts often serve as a starting point for valuation, but depending on your case’s specifics, a formal valuation by an expert accountant might be necessary.

Financial Orders the Court Can Make

After the valuation, the court has several options, including:

  • Sale of part or the entire business
  • Transfer of shares from one spouse to another
  • Sale of shares
  • Division of the business so each spouse retains part of it
  • Lump sum payment from one spouse to another, allowing the paying party to retain their business interests

Proactive Measures to Protect Your Business

If you have substantial business assets, considering a pre-nuptial or post-nuptial agreement to protect these assets is advisable. These agreements can be effective tools to safeguard not just business interests, but also inherited assets. While they aren’t legally binding, courts are likely to uphold them if they’ve been freely entered into, both parties have received independent legal advice, and the agreement is fair and considers each party’s needs.

Involvement of Your Spouse in Your Business

Be cautious when involving your spouse in your business. While there may be tax benefits, such involvement could lead to claims that they have contributed to the business’s success. If you choose this route, ensure that a comprehensive shareholders’ agreement outlines your spouse’s voting rights and that the articles of association contain provisions allowing existing shareholders first dibs on purchasing your spouse’s shares.

Keep Finances Separate

Maintaining clear financial records and avoiding the use of business funds for family expenses can simplify the divorce proceedings and prevent distorted business valuations.

Seek Professional Advice

If you’re going through a separation or contemplating divorce and have business assets, consult with our team of experienced family lawyers. At The Family Law Company, we are committed to offering you the highest quality service, including guidance on any business assets during divorce.

Need some advice? Get in touch today

Lucy Theobald is a Solicitor at The Family Law Company. She brings 20 years of experience in family law, now specialising in Divorce and Finance, Private Law Children and Domestic Abuse. She was previously President of the Cornwall Law Society and has been named in the top 50 Most Inspirational Women in Cornwall.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
The information submitted here is used and stored for the purpose of replying to the enquiry. For more information on how we process data please visit our Privacy Policy.

Information Articles

+ More Blog Articles
Would you like to speak to someone? Find out how to get in touch...