Our seven-point guide gives answers to the most frequently asked questions from divorcing couples who also run a business together.
1. We run a business together, how can we divide up the assets?
First, how you divide up the assets depends on the wishes of you/your partner (for example, would you both like to continue running the business together or would one party prefer to sell their shares?) and the structure of the business (sole trader, limited company or a partnership?), as all three have different legal requirements in such situations.
Second, once both parties have agreed the direction they would like the business to go, in some circumstances, the business would need to be valued, although this can be a complex and lengthy process and it is preferable to avoid it unless a valuation is essential. That is why we would advise both parties to seek professional legal and financial help to enable them to consider this.
2. We agreed that I would stay home and look after the children while my spouse built up the business. Now, we're getting divorced and I think I'm entitled to some of the business' profits.
The Matrimonial Causes Act 1973 contains guidance as to how assets should be divided in a divorce. However, if there are children and one person has stayed home to take care of the children, then the needs of that person and the children is an important factor. The Court will therefore take into account the income and capital in the business.
However, no circumstances are the same, which is why you need expert advice from a family lawyer.
3. I think I'm entitled to use our trade mark for my own, separate business, but my divorcing spouse disagrees. What should I do?
A registered trade mark protects your brand from counterfeiters and also gives you full commercial rights to use it as you please.
A trade mark tends to be granted to a business, and if a business partner decides to part ways and wants to use the trade mark in their own separate business, and the other opposes, the best way to do this inexpensively and as amicably as possible is through dispute resolution [link: http://www.athertongodfrey.co.uk/services/dispute-resolution].
4. I think my spouse is not being transparent with his/her declared assets. How can I prove this in the divorce courts?
Talk to your legal advisor. By law, all assets in a divorce have to be declared, and if a spouse is seen to be hiding their assets, they can be penalised by the courts.
5. We weren't married, but we co-habited and we ran a business together. What are my options?
This depends on the nature of your business partnership (were you a silent or active partner?), the structure of your business (sole trader, limited company or partnership?) and the agreement you had (verbal or written?). There are also other considerations, which is why it is important to seek expert advice from a lawyer specialising in business services.
6. What's a Property Adjustment Order (PAO)?
This is where a property is transferred from one spouse to another (usually, in cases when there are children), or where one of the parties share of the property changes.
7. Who gets the office dog?
In UK law, a dog is ‘chattel', that is, personal property. This means that in court, the judge could treat the dog much like furniture. Therefore, we would advise both parties to try and come to an amicable agreement, for example, by sharing ownership. However, no circumstances are the same, which is why you need expert advice from a family lawyer.
Divorce can be an expensive and lengthy process, more so when both parties run a business together. We are experts in family law and dispute resolution, and can give you the legal guidance you need. Give us a call on 01302 320621.