Family-run businesses under threat as more couples cut marriages short
The beginning of a new year is often a busy time for divorce lawyers in the UK, with enquiries rising threefold once the end of year holidays have finished.
At the start of a new year, many people will look to make serious lifestyle changes, which for some can mean ending an unhappy marriage and starting down the road to divorce.
Of course, whilst divorce is a highly emotional 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.
Research shows around 1.4m UK companies are now run by couples, a percentage of which are salons and hairdressing businesses.
Many business owners remain unaware their partner may be entitled to some share in their company, regardless of their overall involvement with the company.
In the UK, for the court to consider a ‘fair’ division of all your assets, everything will be taken together in one lump, unless you have legal documentation that 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, preventing it from being broken up or sold off to realise enough to pay the court determined settlement.
It is also 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 in itself.
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 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.
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.
About the author: Mark has 25 years’ experience in advising clients on all family law matters, including representing parents and children in children proceedings and resolving financial disputes for high net worth individuals in a client focused manner.
About the firm: Ansons is a leading firm of solicitors with offices in Cannock, Lichfield, Halesowen and Sutton Coldfield, providing a complete range of legal services to businesses and individuals. Services range from advising on commercial property and corporate matters to family law and wills, probate & tax planning.