Divorce is a difficult topic for many people to discuss because it is so emotionally charged. Unfortunately, divorce not only ruins relationships but it can also have a devastating impact on businesses if the correct protocol is not followed.
The biggest problem people face is denial. Denial that they might be heading towards a divorce stops people from preparing their business for the worst, and when they finally take action, it is too late.
Divorce can lead to businesses being sold in order to split the assets, which can ruin the livelihood for one party and lead to a lot of unnecessary animosity. If you suspect you might be heading towards a divorce, or if you just want to protect your business should the worst happen, consider these tips.
Be Clear About When you Started the Business
If the business was started before you were married, it shouldn’t be included in the assets, so your business should be safe. However, this can get complicated if your spouse played a role in getting your business off the ground in the early days, even if you weren’t married yet. If your partner played a role in helping you start the business, be open and honest about this, as they will likely try to inflate their claim. The courts will always side with the more reasonable account, or try to find a middle ground.
Find a Co-owner
The courts will be far less likely to rule in favour of liquidating a business if there is a co-owner outside of the marriage. The courts will then only consider the portion of the business owned by you, and this will likely mean that they leave the business alone, as it is the source of income for another person outside of your marriage. If you and your partner are co-owners of the business, it is likely that your spouse will either want to divide the assets of be bought out of the company, so this can be a good time to bring an investor and co-owner on board.
Never Mix Business and Personal Assets
In the early stages of a business it can be tempting to get as much out of your business assets as possible by using them as personal assets. The best example of this would be a business car that you use in your personal life. It will be difficult to argue this isn’t an asset that should be equally divided if it has been used regularly throughout your marriage, so keep your assets separate.
Update Your Will
If you state in your will that you plan to leave the business to your children, the courts will be far less likely to divide it up, and your ex-spouse may even leave it alone. If you’re unsure about how to go about doing this, there are plenty of reputable will solicitors in Manchester who will be able to help to get your will in order. It’s important that this information is in your will, rather than a letter of wishes, as the latter isn’t considered to be legally binding.