Safeguarding your family business during divorce

With recent stats suggesting that 42% of marriages ended in divorce and 4.8 million family businesses in the UK last year, this month’s blog gives an insight into the aspects you need to consider should you need to protect your livelihood during matrimonial difficulties.

Pre and postnuptial agreements

A prenuptial or postnuptial agreement can be crucial in safeguarding a pre-existing or family business, as it serves as a pre-agreed plan for how a family business should be managed in the event of a divorce. You can find out more about pre and post-nuptial agreements here.

Financial protection

There are several types of agreements that can help a company ensure its financial protection. These include:
Partnership Agreement, which may include a clause that describes the terms in the event of a partner’s divorce.
Shareholder Agreement, which is used together with a Partnership Agreement and may define the procedures for share allocation among the divorcees.

Financial Settlement

It’s always advisable to reach an agreeable solution in any legal conflict. We recommend seeking the guidance of a reputable solicitor to avoid unnecessary expenses, time wastage, and potential court hearings. It is also essential to consider the possible disruption to the business itself.

Employment Law

Complying with employment laws is important even in a family-run business. If you are going through a relationship breakdown, remaining calm and acting responsibly to avoid making hasty decisions is essential. It is also important to note that employment rights may be used as a negotiating tool during a divorce, and any settlement reached should be considered final and complete.

Emotional impact

Divorce is a complex and difficult process that can be emotionally challenging. Adding a family business to this can be even more stressful and upsetting. Therefore, it is essential to acknowledge this aspect of a divorce and plan accordingly. We always recommend that our clients consider their mental health and wellbeing throughout the process. Our team has a wealth of contacts, including mediators and divorce coaches, who can help you navigate this difficult time.
 

If you and your spouse are involved in a family business and want to ensure complete protection of your assets in case of a marriage breakdown, please contact us. We would be happy to discuss the best ways to safeguard your assets.