On a percentage basis, Queensland has more family firms (than other types of businesses) in the Top 500 private firms as published by Business Review Weekly (BRW) than any other state.
In the case of a family breakdown when a family business is involved, the division of assets can be complicated. Protecting yourself and your company while ending your marriage requires a level head at a highly emotional time.
There are a number of considerations that will impact both the separating couple’s property settlement and the business:
1. The need to continue running the business while working out the terms of a property settlement can have a major impact on the performance of a business. In some cases, the levels of conflict between the spouses can be so high that this spills over into the workplace, affecting staff and customers.
2. If the couple cannot cooperate and agree on how the business should be run pending property settlement, the business may end up suffering extreme cash flow problems or damage to its reputation. If the parties plan to co-own the business, it may be necessary to delineate very specifically, in writing, each party’s respective duties and responsibilities.
3. One spouse may seek to exclude the other from being involved in the business, leaving them without access to an income or information about the performance of the business. In the most extreme circumstances a forensic accountant may need to be hired to thoroughly analyse the business to ensure it is not being inappropriately run down or to determine that money is not being hidden.
4. If the business is to be retained by one party who “buys out” the other party, then the parties will need to know the value of the business. Both parties should be wary of simply looking at the value on the balance sheet. There are many different ways a business can be valued, and sometimes a forensic accountant or an appraiser might need to help with the valuation process.
To minimise the financial fallout in the event of a breakup it is desirable to have a pre-nuptial agreement. It may seem unromantic at the time, but the best protection is to plan for the possibility of a divorce before the situation arises. If you started and built the business prior to your marriage, a prenuptial agreement can specify how the business will be treated upon divorce.
If you take the proper steps, the end of a marriage does not have to mean the end of a business. Many couples are able to negotiate a fair settlement of their assets, including their business. In these cases, appropriate advice should be taken as to making this settlement final and binding, and taking into account what would be a tax effective outcome.
While owning a business can complicate the division of your assets, an experienced family and divorce lawyer will be able to guide you through this often very complicated process.
Our Toowoomba-based family law team has more than 30 years of experience in resolving family law matters, and has a strong reputation for a solution-focused approach to all cases involving married and de facto couples.
Whether you are separated, divorced, or thinking about separating, we understand the impact that family disputes can have on your life, and appreciate that the legal process can be overwhelming during these difficult times. With our expertise in negotiation, mediation, and, where required, litigation and advocacy, we will provide clear and compassionate advice so that you can make fully informed choices.
Contact us for a free initial consultation* (conditions apply) with our senior family lawyer: