What happens is we have a family business, and we are divorcing?
Asset separation and property settlement are an important part of any separation for married or defacto couples.
In many cases, couples may be involved in a family business both a small to medium or a larger enterprise. The family business can be held either in the name of one or other of the parties or in some situations in a partnership arrangement with both parties or in a company arrangement with one or more parties as directors. If one of the parties to a marriage or defacto relationship is not noted on the business, this does not necessarily exclude the business from the property pool. It is important to obtain specialist family law advice from an accredited specialist team to determine your rights and entitlements with the family business.
Some factors that need to be considered are:
- Valuing the family business after divorce – often this can be a straightforward process whereby the parties are able to amicably agree on what the business is worth in conjunction with a trusted accountant or advisor. In most cases however, due to issues after the breakdown of a relationship, a formal business valuation will be required. This is usually undertaken by instructing an independent accountant with speciality in family law valuations that will look at the financials and bookwork for the company and provide an overall valuation report.
- Selling the business after divorce – in some cases parties make a difficult decision that it is easier to sell the business and therefore the proceeds are available for division between the parties. This is often a very favourable outcome if one spouse is not interested in continuing to run the business or if the business has not been financially viable but may have some assets. If one of the parties wishes to continue to run the business and buy out the other party’s share and is able to financially afford to do so, a sale will not be forced as a general rule by the Court.
- Buy out your spouse’s share of the family business- this is by far the more common approach that we see when we are dealing with specialised family law cases involving family businesses. Usually one spouse continues to retain the business after divorce and after an agreement as to the distribution of the assets a payment is made to the other spouse for the equity as agreed or as per the valuation conducted as indicated above.
It is very important to note that every situation is unique and individual and that we recommend regardless of your potential understanding, that you receive specialist advice from a lawyer that specialises in family law before undertaking any division of your assets to ensure that you are meeting your best needs and fulfilling all obligations.
Our team of specialist family lawyers can assist with the family business after separation and divorce and our offices are at Penrith, Parramatta, Glenmore Park, St Marys , Richmond and Sydney.