Family business: what to consider when getting divorced

If you’re getting divorced, you may be worried about many issues, from child arrangements to divorce costs and financial settlements. If you have a family business, you may be wondering how it will impact the company moving forwards. 

It’s important to know that your business will be considered when reaching a divorce settlement. The business’s value, how it’s owned and the income it generates will be taken into account.  

To help you prepare for the future, we explore some of the key information and considerations you need to make when dividing your business through divorce. 

Ensure the business is valued accurately

One of the first steps is to have your business valued, which is typically done by a single joint expert who works on behalf of you and your spouse. 

This should detail the income your business provides and can generate in the future. 

How this is calculated will depend on your business structure. For instance, whether you’re a sole trader, have an investment-based company or a trading business. 

Understand how decisions may be made

There are various orders a court can make when dividing a business. This includes: 

• the sale of the business or sale of shares

• transfer of a share of ownership from one person to the other

• lump sum payments to compensate the non-business-owning person

• ongoing spousal maintenance

Several factors will impact how this decision is made, like what shares each person has in the business, if it was founded pre-marriage, if it’s owned solely by one person, who runs the company and so on.

Speak to legal experts

As you navigate this tricky time, it may be worth consulting with expert divorce solicitors who can provide legal advice regarding your split. 

This can be beneficial because every divorce and business is different, so the best path forward and final outcome will depend on your unique circumstances. 

Getting bespoke legal advice can guide you through the complexities of dividing your business, assist with financial disclosures, investigate the accuracy of business valuations, help with tax issues and more. 

Specialist solicitors can also offer support and guidance on other aspects of your divorce, including what will happen to your family home, child arrangements, joint accounts, pensions and so on.

Going through a divorce can be incredibly challenging and you may be worried about the uncertainty that lies ahead for you and your business. Remember that you’re not alone and can seek help throughout the process. 

Reach out to friends and family for support, seek guidance from Citizen’s Advice and get expert legal advice to help you make the right decisions for your future.