Deciding how to divide the matrimonial finances on divorce can have far reaching consequences for your life post separation. When a family run business is also a part of the equation this task can seem even more daunting. Divorces involving business assets require careful consideration and specialist knowledge. The first step will be to determine whether the business constitutes a marital or non-marital asset. Assets acquired during the course of the marriage are typically considered to be marital, and this will include businesses started or developed during the course of the marriage. However, where a business asset was owned prior to the marriage or has been passed down via an inheritance, these can be considered non-matrimonial. Therefore, drawing the distinction from the outset will be an important task. Thereafter, consideration will need to be given as to how the business is to be valued. Accurately valuing any business owned by either spouse, or both spouses, is crucial in a divorce. This may involve assessing financial statements, market conditions, and potential future earnings. This may require expert involvement; it is not uncommon in divorce proceedings for forensic accountants to be appointed to provide an unbiased and realistic valuation of a business. This helps both parties decide how the business should be dealt with upon divorce.

In divorce proceedings, the Courts aim to achieve a fair and reasonable division of the matrimonial assets. This does not always mean an equal division of the assets and factors such as each spouse’s contribution towards a business or whether the business was owned prior to the marriage can affect the division. There can be a number of options in regards to deciding how to deal with a business. The business could be retained by one party with the other party retaining other matrimonial assets. Alternatively, the business could be sold and the proceeds divided. Or the parties may decide to continue to run the business post divorce. All options must be considered in light of the overall matrimonial division.

Whether a business is retained by both of the parties or one party, will potentially affect the other person’s income. Therefore, the Court will need to decide how that other person’s income is to be addressed and whether spousal maintenance is required in order to fill the hole left by one party no longer owning and running the business. Specialist advice is therefore essential in order to ensure that the right outcome is achieved, both for the parties and the business.

If you think we may be able to assist you, please do not hesitate to contact us for an initial fixed fee appointment to understand everything you need to know about businesses and divorce. Please call our offices today on (01702) 338338 to speak with a member of our specialist family team. We are able to accommodate appointments in our Westcliff, Billericay, Benfleet and London offices.