In many matrimonial matters the most substantial asset is the family home, but there are cases where there is a family business or where one of the parties has a large interest in a business, which will affect the financial settlement. The parties may have worked in a partnership together, or one of the parties may be a sole trader or a partnership with someone other than the spouse.
There are many different types of businesses and the outcomes will be different depending on several factors:
- What type of business is being dealt with?
- What is going to happen to the business?
- What issues arise that have an impact on the matrimonial dispute in relation to the business?
- What is the business worth and what is each party's true interest in the business?
Consideration will have to be given as to the impact decisions relating to the business will have on the family post financial settlement, as well as others [other what?]. There are various options where there is a business, although the extent of available options will depend on the individual case.
The main concern is that the business will have to be sold. An example of cases where the sale of the family business might be inappropriate:
- The small business which produces the family income.
- A party who has made a small or negligible contribution
- A business owning party can 'buy out' the other spouse's entitlement in the matrimonial settlement without recourse to the business.
- Business assets such as shares can be transferred between the spouses.
If it is proposed that the business is not to be sold then it is important to understand not only the value of the business but also the true value of both parties' share in it and the impact of any transfer of shares. For example, is capital gains tax payable? In addition does the Memorandum of Understanding/Association prevent the transfer or sale of shares or the taking of clients?
If you feel any of these issues affect you, please contact Samantha Jago of our Family Department or Nick Richardson of our Commercial Department for further advice.