I am a Business Owner – Will my Shares be treated as Marital Assets?

It is not uncommon for one or both spouses to have business interests and within financial proceedings linked to divorce, there is often argument as to what emphasis should be placed on such business assets.

Business Value

One of the first questions asked is usually how much is the business worth? When considering such questions, it is important to determine what is actually owned by the business. Clearly a business that owns premises, machinery, equipment and stock may well have a high value, whereas a company that operates out of rented premises (or possibly the family home) with little equipment or stock may be worth very little.

Within financial proceedings, the Courts can direct an accountant to value a business. This may be needed to settle a dispute between the parties where the business owner claims it is worth next to nothing and the non-business owner claims it is worth a considerable amount.

Shareholding

In relation to shareholdings, it is not uncommon for both spouses to hold shares in the company, but going forward it is not generally appropriate for the shares to remain held in this fashion. Usually, as part of any final settlement those shares need to be transferred to the person who is involved in the day to day running of the business.

It is generally a pointless exercise to value the shares in a small business, there is rarely any market for those shares.

Factors likely to be considered by the Court

In order to decide matters in a fair manner, the Court need to know the value of any business interests, although often the actual value of the business is secondary to the importance of knowing the amount of income that the business produces. Part of the reason for this is that it is generally pointless selling a small business, as once sold that will deprive the former owner of income from that business.

There can be cases where the business has only been operated by one spouse, and the other spouse has had nothing to do with the business. In these circumstances it may be possible to argue that the business is non-matrimonial property. Arguments as to whether property is matrimonial or non-matrimonial can apply to all sorts of assets, but such arguments are only appropriate in cases where it is possible to meet the financial needs of both parties out of the assets that are agreed to be matrimonial. There is seldom justification for arguing about non-matrimonial property in cases where the matrimonial property is not sufficient to meet the financial needs of both parties combined.

Whilst the above sets out some of the factors likely to be considered by the Court it is generally impossible to give generic advice in relation to financial settlement arising from divorce.

The Court considers a wide range of factors prior to deciding on the division of matrimonial assets.

How can Andrew Isaacs Law help?

Once all of the facts and figures are known, it should be possible to advise as to what order a Court is likely to make, and at this point negotiations can take place with the aim of settling your matter on good terms.

If you need any advice upon the above, we suggest that you contact us to arrange a consultation with one of our experienced Family Lawyers.

Richard Johnson – Divorce and Finances Specialist

Dated: 27.03.23