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EXPERT OPINION


FAMILY-RUN BUSINESSES UNDER THREAT FROM SOARING DIVORCE RATES


Ansons Solicitors director and head of family law, Mark Buttery looks at how divorce can affect a family business and advises on how to protect assets and find a fair resolution in the event of a marriage breakdown.


threefold once the end of year holidays are out of the way. With a new year ahead, many of us will outline resolutions to help inspire positive lifestyle changes. This focus on the future will cause many couples to consider their marriage and, finally, decide there is nothing left to do; all avenues of reconciliation have been exhausted. Of


T is a highly emotional


course, whilst divorce matter,


experienced family lawyers work hard to understand their client’s perspective, advise them quickly and cost-effectively, helping them avoid ending their marriage in court.


A team approach


Whilst many consider a strong marriage to be based on good teamwork, a good divorce will also rely on the efforts of many lawyers and other professionals, collaborating closely to deliver the desired outcome for their client. Children in the relationship can undoubtedly increase the problems during a divorce, but matters can be seriously tricky when one or both of the divorcing couple own or manage a business. Research shows around 1.4million UK companies are now run by couples, with the number on the rise.


Two’s company


Many business owners remain unaware their partner may be entitled


to some share in their


company, even if the partner has never been involved in the day- to-day activities of


the company.


The likelihood of this situation grows with the length of marriage


12 DIY WEEK 22 FEBRUARY 2019


he beginning of a new year is often a busy time for divorce


lawyers


in the UK, with enquiries rising


or inequality in financial resources. In the UK, for the court to consider


a ‘fair’ division of all your assets, everything will be taken together in one lump, with little distinction made between assets, unless you have


legal documentation proves a different position.


Divorce can be bad for business Dealing with a family business during the divorce process often raises many complex issues, starting with its valuation, inheritance wishes, financial contributions, dividend payments and the shares or interests of other family members. The family court will hope to


protect a family business from becoming too involved in a divorce, to avoid the business having to be broken up or sold off to realise enough to pay the court determined settlement. Alternatively, one of the couple may have


divorcing to


buy out the other if they have a share in the company, or liquidate assets to achieve the same outcome. All of which can be messy and time-consuming, often negatively impacting


the the company. It is not uncommon for newly


divorced partners to have to work together until the business can be sold, which brings a whole new series of challenges – to achieve


performance of that


the maximum sale price will need the pair to work together and


make beneficial decisions!


Protect your business from divorce


The first step to protecting a business is not particularly romantic and requires foresight at the outset to draft appropriate documentation. Pre-nuptial agreements are a tricky topic for many couples, although seen as overly pessimistic, they are essential for any business. The


agreement is its reputation, not just


about the relationship between the owners, but the future of the business,


the lives


of its employees, any investors, its clients and even its customers. A Founder’s Agreement is a good place to start. The agreement sets out formally how the founders of a business are going to operate it, to avoid any disputes or misunderstandings which could threaten the business in the future. In the UK this formal document will typically be in the form of a Shareholders Agreement.


Leave emotion at the door The time to discover your business has not been set up with the correct agreements, is not when divorce lawyers are looking to get it valued in preparation for a sale.


successfully jointly


It will be an emotional time, and preparation in advance will ensure a more amicable divorce, with everyone aware what’s at stake. Whether your relationship


is


strong and long or it is becoming tense, now might be a good time to have a chat with one of our lawyers to understand your position. We can leave emotion aside and call on the services of a wide range of specialist lawyers who will advise and protect your position. You might own all, part or none of a family business, but knowing which direction your next step should take you in the future, requires first knowing where you are now.


“Children in the relationship can undoubtedly increase the problems during a divorce, but matters can be seriously tricky when one or both of the divorcing couple own or manage a business.”


www.diyweek.net


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