One of the guiding principles in divorce is that the net value of any matrimonial property should be shared fairly between the divorcing couple.
Generally speaking, matrimonial property is all the property which was brought into the marriage by each individual at the date of the marriage, or was acquired by the couple during the marriage, other than by way of gift or succession from a third party.
Most matrimonial property is relatively simple to value – houses, life policies etc. But where a business is owned and run by one spouse or jointly by the couple, valuing can become extremely complex.
Regardless of how the business is structured (e.g. sole trader, partnership or company) it, or the spouse's proportion of it, may require to be valued in a divorce. This is a highly complex area requiring advice from a number of experts.
Partnership Agreements or Memoranda and Articles of Association might cover more regular business transactions, but it is unlikely that they would cover the separation or divorce of key personnel. This could be dealt with by using clauses which cover the situation where a partner, member or an employee leaves, or by applying the general law if no such provision exists.
The court would certainly consider any business structure documents when valuing a business as matrimonial property.
So how can a couple with a business ensure that separation or divorce doesn't mean the end of the business? The simple answer is that it may be politic, when drawing up business documents, to make provision for separation or divorce. This would be extremely beneficial when valuing matrimonial property, particularly where a spouse is brought into the business for tax planning purposes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.