Categorized | Agents

The Division of Company Assets During a Divorce

Divorce rates are as high as they have ever been, the may even be at their highest rate ever. Anyone who has ever had a relationship end knows that it can be messy. Divorce is even messier as each spouse has a certain claim over a portion of the assets. The umbrella of what needs to be divided encompasses everything including the family business.

Some may try to argue that the other party has no entitlement to company assets because they were never actively involved in the business; however, this argument will not hold up in a court of law. In a divorce procedure, a claim may be laid against the company’s assets, including any cash and income or director loans. It is a very real possibility that the division of company assets may even lead to the forced sale of your business.

The best choice for any business owner is to take measures that will protect the business from divorce before a divorce is looming. This can be done in many ways.

Prenuptial and Postnuptial Agreements

Many people have heard of prenuptial agreements. These agreements entered into prior to the marriage date and are meant to protect one or both parties’ assets in the event of a breakdown of their marriage. What many people do not know is that prenuptials are no more than words on a paper under English law. This means that they will not hold a candle in an actual divorce proceeding. Sure they may be considered, but they likely will not be fully upheld. This is why a postnuptial agreement is a better option for those who would like the protection that an agreement can offer. Postnuptial, just as they sound, are drafted and signed post-wedding and are upheld. The best idea is to talk to a divorce lawyer and find more information as they will be able to counsel and guide you through the process.

It’s too late for all that…

If your marriage is already in disarray, chances are you have some questions. As far as the division of assets is concerned the amount allotted is based on some considerations:

  • The length of marriage
  • Contribution

Some are excited by the idea that a decision takes into account one’s contribution to the marriage. Those people should know that a homemaker’s contribution is considered to be just as important as the person who works and pays the bills.

On the off chance that the businesses liquid assets will not cover the settlement amount and no agreement can be reached, it is a very real possibility that the business will need to be sold. If one spouse does not want to sell the business, sometimes a deal can be made by allotting more non-business assets to the other party. In rare cases where the value of the business is projected to increase over the coming years, a settlement may be deferred until the time when the company has reached it’s full potential.

The best idea is to always cover your back when entering into a marriage. This must be done with some tact though, or the other party may feel not trusted or as if they aren’t really loved. The best way is to be open and honest and promote the idea of protection for both of you should anything ever happen. As years go by people change and sometimes they are no longer well matched, that is simply reality.

This is a guest post by Ashley Williamson, a freelance writer and blogger who shares her business and law-related tips on various blogs.

Twitter