Divorce – Mixing Marriage And Business


Divorce is often a stressful situation for people to go through, but when one party owns a business, that business can be as affected by the divorce as much as the parties themselves.

Most business owners don’t head into marriage thinking about doomsday scenarios, but when divorce is imminent, small businesses are at significant risk, as leadership and financial resources may be stretched thin.

Following the landmark divorce case of White v White in 2000, the basic principle in divorce cases is that the family’s assets should be shared on a basis which reflects the respective contributions of the parties. Most importantly, the role of ‘homemaker’ is given parity with that of the ‘breadwinner’.

There is no longer an assumption that a family business will automatically be protected on divorce. Every case is different and many factors have to be taken into account, but in essence a family business will be treated as an asset of the family in the same way as the family home and any other assets.

Therefore, not only will the business be put into the marital assets, those assets may very well be split 50/50 by the Court. This does not mean that the business will need to be sold, one party may retain the business and the Court may compensate the other party with a larger share of the other asset.

The first step towards agreeing a settlement is for both parties to commit to a full and frank disclosure of their financial circumstances. To reach a settlement which is fair and reasonable, valuations of all the family assets including property, pensions, investments and the business will be required. Valuation of the business is an essential but tricky and expensive exercise and will require a financial expert who will scrutinise the books and records of the business.

There are ways to reduce the impact of a divorce on the small business. First and foremost, instruct an experienced solicitor.

FPH Law has extensive experience in managing both the personal and business aspects of a divorce, and can provide advice on how to alleviate the impact on the business.  Contact our Family and Children Law Team today to find out how we can help you.