The Institute for Family Business reports that two in three private sector companies are family businesses. For some married couples, this may be a joint venture which they have built together or one spouse may have joined the other in a business they pre-owned before the marriage. In either scenario, if the couple separate, the business will form part of the matrimonial assets. This means that for some couples, in addition to dealing with the emotional turmoil of the separation, which can involve complex financial matters and difficult decisions about children, there will be the additional stress and worry about deciding what is to happen to the family business.
Family law specialist, Rachell Bates explains: “husband and wife business teams are not unusual and if the couple separate, the family business will be treated as a matrimonial asset and in most cases, an independent valuation of the business will need to be carried out in order to establish its worth. If the couple have children, the children’s financial needs will be paramount and this could determine what happens to the family business.”
The separating spouses will need to decide whether they feel they can continue in business together, which although less common, is possible. Alternatively, one spouse may wish to continue running the business whilst the other leaves it, receiving a settlement in respect of their interest or in certain circumstances, the couple may feel there is no other option but to sell the business.
Mrs Bates continues: “unfortunately, all too often the team at Crombie Wilkinson are approached after the difficulties in a marriage have spilled into the family business and there may be problems with one party hiding or disposing of business assets, for example. I therefore urge anyone who is running a business with their spouse with concerns about how the business is to be dealt with on divorce or separation to contact a solicitor for advice as soon as possible. In many cases, mediation or another method of constructive negotiation may be possible but the couple have to be prepared to engage in negotiations. If one party is unwilling to do this, the other spouse may need to consider taking steps to protect their interest in the business and other matrimonial assets and so the earlier they seek appropriate legal advice, the better”.
To speak to a family law specialist at Crombie Wilkinson Solicitors, please contact any of our three offices at York, Selby or Malton.