Business 101: How Company Assets Are Divided in the Event of a Divorce or Dissolution

Business 101: How Company Assets Are Divided in the Event of a Divorce or Dissolution

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When you marry or are in a long-term relationship, you and your partner will naturally create a life together. You will share everything from a home to children, cars, pets, and perhaps even a family business.

So what happens when it all goes wrong? The sad reality is that many couples will not be together forever, and when they separate, the life they have madehas to somehow be divvied up between them, including any enterprises they might have built.  

If you’ve found yourself in a comparable situation, here’s a brief guide that you might find helpful…  

Understanding How Business Interests and Financial Settlements Are Viewed

Some people are under the erroneous belief that a company they have built themselves belongs to them alone, but if you are or have been married, this will rarely be the case. Rather, the business interests and their value are considered to be ‘matrimonial assets’, meaning that in the event of a divorce or dissolution, a settlement fair to both parties must be reached with regards to them.   

How the Courts Deal with This

If you’re afraid of losing your business after what you’ve read above, you really don’t need to be. As a rule, the courts will always try to leave the company founder with their enterprise intact, seeking to compensate the remaining partner with either a larger share of the other matrimonial assets, or maintenance instead. Usually, this will be what the couple want too.

Nor does this mean that you will be left with nothing but your venture. In most instances, the courts will try not to leave one person with all of the cash assets and the other with their share of the money tied up in something like a business.  

How Your Business Will Be Valued

Your next question will probably relate to how your company will be valued. The answer is that a number of factors will be taken into account, including:  

  • Company assets like property and stock
  • Company earnings
  • The structure of the business – is it a limited company, sole trader, or partnership?  

This process will often be a complicated one, as well as extremely costly, with the prices of valuations generally rising into the thousands. For this reason, seeking legal advice from a company like Withers Worldwide is always advised before you begin.

Approach your divorce or dissolution sensibly, making sure that you understand the process and know what to expect from it, and you should be able to make an incredibly hard time a whole lot easier for yourself.

 

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