Protecting your business in divorce: advice from an expert solicitor

AdobeStock_671456313-divorce.jpg.jpg

The law treats a business as an asset, making its ownership significant in financial matters related to divorce.

David Connor is a director at WHN’s Rawtenstall office and leads the firm’s services for individuals and families. He shares key advice on protecting your business in the event of a divorce.


A key aspect in determining how a business is viewed in divorce proceedings is how it is structured. It could be run by a sole trader, as a partnership, limited liability partnership or limited company. A trust can also be established to operate a business.

Even though a business may be a separate legal entity from the parties to divorce and this legal entity may well own the business assets and contracts, the business itself is not immune from financial matters within a divorce.

You may own the business jointly with your partner or you may own it with others. Either way, dealing with a business in divorce raises significant issues which need to be considered.

The value of the business

The business’s value is key when looking at financial remedies. There are several differing methods to give an idea of value and doing this can be a costly and time-consuming exercise.

Generally, but not always, the courts prefer to maintain the existence of a business, but that may mean finding other assets or methods to compensate for its value. That could include paying spousal maintenance, especially where both parties have a hand in the running of the business and it has been their source of income.

If such methods are not possible, the business may need to be sold.

Important considerations when forming a business

On the formation of your business, you may wish to think about who should be involved in its management.

Appointing your spouse as a co-partner, director, company secretary, or shareholder may be attractive but could have consequences down the line. If they have played a legitimate role in the development of the business, this could increase arguments about a claim over the business in the event of a marriage breakdown. It may also give them employment rights.

For limited companies, things like bespoke shareholder agreements and articles of association can have clauses which deal with what should happen on separation or divorce. This may provide buyout options, particularly where companies or businesses are jointly owned by both spouses.

There may be information setting out the different classes of shares for a limited company and the rights that go with them. In other cases, a bespoke partnership agreement may help.

Nuptial agreements can be a useful method to stipulate how assets are to be divided in the event of divorce, including how the business will be dealt with. They are not automatically binding, but where there is appropriate disclosure, separate advice and the outcome is seen as fair and reasonable, then the courts are likely to enforce them.

Trusts can sometimes be used as a structure to run a business. The trustees can own the business assets, and the trust document can state how profits are to be determined. They do have tax consequences, so advice is needed upon a structure of this nature.

Structure is key

As can be seen, there is no one-size-fits-all method that can work for everyone. Thought needs to be given to the structure when a business is being established. That is: sole trader, trust, limited company, limited liability partnership or partnership.

Thought must also be given to the documentation needed to support this. That could be a partnership agreement, shareholder agreement, articles of association or trust deed.

When thinking of getting married, consider if a prenuptial agreement setting out what should happen to the business interests is appropriate. You can also enter into nuptial agreements after marriage.

Above all, seek expert advice along the way. WHN has a team of family law specialists who can assist with nuptial agreements and specialists who can advise on business structures, trusts, company, formation, and associated documentation.

David specialises in all areas of family law and represents individuals seeking to resolve family law matters either by agreement or through court proceedings where necessary.

He has particular expertise in financial settlements in divorce and separation, especially high-value cases, those involving business interests and agreements where assets may be at risk of being removed or dissipated.

For further information on protecting your business in family law matters, call David on 01706 225621 on email him at [email protected]

Enjoyed this? Read more from Woodcocks Haworth & Nuttall Solicitors

Latest news

1

Beever and Struthers advise on £1.5bn funding for 2,000 new social homes a year John Jones

Beever and Struthers advise on £1.5bn funding for 2,000 new social homes a year

03 Jul 2025

2

Airframe Designs aligns with US programme for additive manufacturing growth Additive manufacturing technology unit At Airframe Designs

Airframe Designs aligns with US programme for additive manufacturing growth

03 Jul 2025

3

Panache Cruises on course for further growth with support from Rosebud James Cole

Panache Cruises on course for further growth with support from Rosebud

03 Jul 2025

4

Lancashire emerges as key player in UK's Defence and Tech Sector Mo Isap Chair Of The Lancashire Business Board Nick Miles National Cyber Force Deputy Director For Samlesbury Annette Weekes Representative Of The NWRDSC

Lancashire emerges as key player in UK's Defence and Tech Sector

03 Jul 2025

5

Report shows impact of BAE Systems in Lancashire BAE Systems Radar

Report shows impact of BAE Systems in Lancashire

02 Jul 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV123 July/August Launch Event
Lancashire Business View magazine launch
Networking
16 Jul 2025

LBV123 July/August Launch Event

Burnley

08:30 - 10:30

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

The Marketing Metrics that Matter – July 4
LBV Hub Seminars
04 Jul 2025 - 04 Jul 2025

The Marketing Metrics that Matter – July 4

Door4 Office, Burnley Wharf, Burnley, BB11 1JG

08:30 - 11:00

Tri-Site Survey Equipment Showcase
unnamed (2).jpg.jpg
LBV Hub Seminars
09 Jul 2025 - 09 Jul 2025

Tri-Site Survey Equipment Showcase

Crow Wood Hotel, Burnley, BB12 0RT

09:30 - 16:00

Blackburn Cathedral hosts Champagne and Diamonds Event with Ainsworth Jewellers
Champagne-Jewellery 10 07 25_page-0001.jpg.jpg
LBV Hub Awards
10 Jul 2025 - 10 Jul 2025

Blackburn Cathedral hosts Champagne and Diamonds Event with Ainsworth Jewellers

Blackburn Cathedral, Blackburn, BB1 5AA

18:00 - 20:30

Choose Chorley for Business - Talent Reimagined Business Breakfast
talentreimaginedbb.png.png
LBV Hub Seminars
10 Jul 2025 - 10 Jul 2025

Choose Chorley for Business - Talent Reimagined Business Breakfast

Strawberry Fields Digital Hub, Chorley, PR71PS

08:00 - 10:30

Shaping Preston's future by remembering its past
1750160034867.png.png
LBV Hub Networking
16 Jul 2025 - 16 Jul 2025

Shaping Preston's future by remembering its past

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 20:30

Chamber Summer BBQ
LBV Hub Social
17 Jul 2025 - 17 Jul 2025

Chamber Summer BBQ

The Borough, Dalton Square, Lancaster, LA1 1PP

17:30 - 20:00

Preston Tech Connection: Web3 is Dead. Or is It?
July Longer Banner.jpg.jpg
LBV Hub Networking
29 Jul 2025 - 29 Jul 2025

Preston Tech Connection: Web3 is Dead. Or is It?

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 19:30

Preston Freelancer Meet-Up: July
Longer July Banner.jpg.jpg
LBV Hub Networking
31 Jul 2025 - 31 Jul 2025

Preston Freelancer Meet-Up: July

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin