The financial impact of a divorce can be difficult for anyone to deal with, but for those with business assets to maintain, it can be an especially concerning time. In this post, we’ll list a few effective tips for protecting your assets during a divorce.
A divorce is one of the most challenging things a person can go through. Not only is there the emotional hardship of a breakup to deal with, but the financial aspects of a divorce can also have a huge impact on the rest of your life. For business owners, this poses a very serious threat to the future of the company — especially in high-net-worth divorce cases, where a vast range of assets and large sums of money are divided between spouses.
Seek the Advice of Reputable and Experienced Divorce Lawyers
The first step of a divorce, or any legal matter, should be to seek the advice and guidance of a reputable and experienced family lawyer. For divorces involving business assets, even if the parties aren’t high-net-worth individuals, you’ll find that a high-net-worth solicitor often possesses not only the necessary skills and knowledge to handle your case but also the vital experience with legal matters involving substantial amounts of money and the division of business assets.
As someone who owns or runs a company, you’ll know how crucial it is to find the best person for an important task. It’s essential to maintain the same mindset when the time comes to choose a divorce solicitor. Shopping around for reliable and experienced high-net-worth divorce lawyers gives you have the best chance of protecting your business assets during a divorce and provides you with a more in-depth understanding of the divorce process in general.
Pre-Divorce Mistakes to Avoid
The following actions often seem sensible or tactile at the time, but they can cause problems in the long run:
- Reaching an agreement before you get legal guidance: At this stage, you won’t know the full extent of your spouse’s assets or how they will be divided. Therefore, making agreements about the division of assets can create hostility and mistrust, as you may discover that said agreements were ill-judged.
- Acquiring information or documents that aren’t yours: Actions such as opening your spouse’s bank statements or logging into their online banking or email accounts are not permitted by the courts. Any evidence obtained in this manner is not generally admissible.
- Transferring assets: While it may be tempting to transfer assets to a third party or move them into trusts or offshore accounts, the courts will take the view that it was done as an act of deceit.
- Move out of the marital home: Although this can be difficult for divorcing couples, it’s a good idea to remain in the marital home with your spouse and children. If you move out, your spouse could argue that they are the children’s primary caregiver and, therefore, have a greater need for housing. It’s also worth noting that this could leave them in a more favourable financial position. For business owners, this can be a serious issue, as it means you’ll have the hassle of finding new living arrangements and a financial adjustment to contend with — both of which can seriously impact your ability to run a company efficiently.
Does My Spouse Have a Stake in My Business?
When it comes to the division of assets, the court will do its utmost to ensure that the starting point is equality. As a business owner or shareholder, you may be able to deploy arguments to dispute the presumed equal division. In this instance, you have a better chance of success if you established the company before meeting or marrying your spouse.
Your first step should be to work out the value of your business assets. This can be initially handled by your business’s accountant, but if you and your spouse fail to agree on the value, you might need an independent forensic accountant’s report to settle the dispute. Once a value has been established, you will then have to agree on the percentage that your spouse is entitled to.
This may well be 50% but, depending on the arguments or nature of the case, it could differ. In these situations, the courts will consider liquidity and try to ascertain if anything can be sold from a company to satisfy the entitlement of the other party. In most cases, this comes in the form of funds or property.