Divorce
‘We married late in life. Didn’t work out and have just separated after 5 years although really, I would say we were only properly close for about 2. No children. I’ve got a successful business which I’ve run for years. Way before I met my Wife. Now she wants to get her hands on it.’
The approach of the law
When we are approached by our clients regarding financial relief in divorce, a decision must be made about how those assets are divided. Naturally, the requirement is for full disclosure of all the assets of each of you.
We need to understand the backdrop. If you have any children, how much you each earn, how long the marriage is, what your needs are and so on.
After those are taken care of, what is left and how should that be divided, if at all?
Childlessness
Length and/or quality of marriage and whether there are dependent children in themselves have no bearing on the financial outcome at all.
So, if we look at all the assets and effects, the starting point for consideration is equal division of those assets. However, the question of how respective needs will be met is the first consideration, taking into account all of the circumstances of the individual case, children or otherwise. The mere existence or otherwise of children of the marriage ought not to influence the court, but their needs must, as must those of the primary carer of the children.
Length of marriage
Little importance is placed on the duration of the marriage, save that it may have an impact on needs and/or the respective direct or indirect financial contributions to the marriage. This is important when considering whether any share of your successful business should be afforded to your wife in any claim for financial relief.
It stands to reason that business asset accrual in a short marriage is usually less than that in a long marriage.
It’s important that you determine at the outset just exactly when you started living together and when you separated because this period in a short marriage is key to the business valuation.
After all of the asset values are gathered, and important respective needs have been addressed, what is left over is an examination of that which has been acquired in the marriage, which is important when applying the principle of sharing.
In terms of your business, during the marriage, what business connections and transactions took place within the marriage? It is these that are valued after needs are determined.
Valuation of your business
It is very difficult for us to determine the value here. Not to mention expensive when expert valuers are involved. Because there are many variables.
- Consider the market availability for your private company and whether the business is actually you only, rather than as a potential third-party interest.
- Expect that the valuations of your business may differ wildly.
- Profitability may be uncertain in any given period.
- The difference between opinion value and cash value is obvious.
- Only the sale of a business reveals the true value.
In your particular case, it is the increase in value of the business from a committed intention to cohabit, to determination of a settlement, that will be recognised.
If you recognise any of this in your own separated circumstances, or any other concern that is not raised here, do visit or call. We can help initially guide you over a friendly free half-hour discussion with no obligation.