How to protect your business during a divorce

The tireless dedication invested into growing a family business during, and even prior to a marriage can feel to be in jeopardy if the marriage then breaks down.

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By Elspeth Kinder, partner, DWF

It is critical for early legal advice to be taken from a divorce lawyer with the expertise of routinely working with entrepreneurs to ensure the business is protected and preserved post-divorce and can continue to provide for all who rely upon it.

The impact of a relationship breakdown on a business can be devastating.  Where a divorcing couple own and operate a business together, there are inevitable questions to resolve surrounding how the business will continue whilst ensuring both parties share fairly in the business that they may have spent many years developing and nurturing together.

For the couple themselves, they are facing their own personal and emotional difficulties both at home and in the workplace; for their staff, customers and suppliers there is also a knock on effect as the uncertainty that divorce can create takes hold.  The situation can be just as difficult to resolve where only one party to the marriage operates a business: they want to protect and preserve their business at all cost, whereas their spouse is often highly suspicious of exactly what the financial position of the business is.

It is essential that business owners don't panic, nor make any rash decisions if their marriage falls into difficulties.  A divorce is a business deal like no other because of the emotions that so often play a huge part when a marriage ends.  Taking good quality legal advice and acting upon it will ensure that an entrepreneur exercises the same objectivity and rational decision making as they would ordinarily apply to their business.

Benefits of prenuptial agreements

For those in business who are contemplating marriage or looking to pass their business to future generations, a pre-nuptial agreement is a valuable mechanism to protect and preserve the family business.

A landmark decision of the Supreme Court handed down in 2010 has completely altered the landscape for pre-nuptial agreements.  They are now an immensely useful tool which, if fairly entered into with the benefit of proper legal advice, will carry decisive weight in any subsequent divorce proceedings.  The bespoke agreements that I prepare for clients are tailored to their unique family situation.