Business Assets & Divorce

Divorce is never an easy transition, but there are additional factors to overcome when there is a family business involved. The division of the business has traditionally been the subject of a great deal of argument, but recent cases have at least clarified the thinking of the highest judges in the land. The leading case, which was decided in the House of Lords, involved a Mr and Mrs White who were farmers. The ruling in this case established the principle that there has to be a good reason for the division of the business to be unequal.

Unequal splits of joint business assets can be decided in some situations. For example, a case in which the husband’s business did not have sufficient liquidity (ability to generate cash) to finance an equal split, the Judge awarded the wife a 39 per cent share of the total assets, including the family home. Due to the financial circumstances of the business, the balance of her settlement was ordered to be paid over a number of years. The Judge commented that the ‘old taboos against selling the goose that lays the golden eggs have been largely laid to rest… but if it is necessary to sell her, it is essential that her egg-laying abilities are damaged as little as possible in the process’.

In a more recent case, a husband who disputed that his ex-wife’s settlement should be reduced, due to the fact she had taken up with a new partner leading a luxurious lifestyle, failed in his attempt. Similarly, a husband’s attempt to persuade the Court that the settlement required for his daughter should be reduced was rejected when it was considered that she would have to change schools, which was not in her interest. It is evident that the needs of the children, not the adults are paramount in such cases.

One important factor in the division of martial assets generally, is the relative contributions of the two parties to the creation of the assets. This does not need to be direct monetary contributions, as a stay at home spouse can be awarded a substantial proportion of the assets as they were instrumental (by supporting the wealth creator) in the creation of the family’s wealth.

Where there are no surplus assets, the Courts will look first to the housing requirements of the parent who looks after the children, with any additional assets being fairly apportioned by reference to the needs of each party and their ability to provide for their needs.

Following a recent decision of the Supreme Court, it would appear that there a pre (or post) nuptial agreement has been entered into, in appropriate circumstances, business assets may be divided in accordance with the agreement.

If you require any legal assistance relating to family law, please do not hesitate to contact us on 01536 276300 or email for specialist family law advice.