Divorce when assets are tied up with the family business

Divorce when assets are tied up with the family business

family business divorce separation sydney

family business divorce separation sydney

Splitting assets in a separation can be a complex process, especially when there is a family business involved. Here are a few options that may be considered:

  • Sell the business: One option is to sell the business and divide the proceeds among the parties involved. This can be a good option if one spouse is not interested in continuing to run the business or if the business is not financially viable.
  • Buyout: Another option is for one spouse to buy out the other’s share of the business. This can be done through a lump sum payment or through a structured payment plan.
  • Continue to run the business together: In some cases, it may be possible for the parties to continue to run the business together, either as co-owners or with one spouse retaining ownership and the other receiving a share of the profits.

It’s important to keep in mind that each situation is unique, and the best course of action will depend on the specific circumstances of the case. It may be helpful to seek the advice of a financial planner or family lawyer to determine the best course of action.

But what happens if my husband’s family are all part of the family business?

In a successful case recently, our client was part of the family business and were married with children for 3 decades.

The parties, Alex and Chris, had been married for about 30 years and had adult children.

Both had mostly worked throughout the relationship and had a comfortable lifestyle as a result.

Between them they had various assets including a home and significant superannuation entitlements. Their most valuable asset was an interest in a very substantial company which was run by various members of Alex’s family.

The difficulty for the parties was that it would be complex, if not impossible, to realise their interest in the company. That meant Alex would retain the interest solely, and Chris would retain the home and various other assets. But given the interest in the company was so valuable, that settlement was not fair to Chris, and so then the parties had to work out a way to make the settlement fair to both of them.

There was not any other significant capital available that Alex could have transferred to Chris. So the solution was for a portion of dividends payable to the entity retained by Alex, to be distributed to Chris. This required consideration of various tax aspects, and the advice of accountants (both from the company and the parties’ own accountants). The parties had to consider the most appropriate manner in which to make the distributions to Chris, and one of the trickiest issues was about how it could be enforced.

While this was not the financial clean break between the parties which is usually the preferred outcome, it was an appropriate outcome in the circumstances. The parties worked hard to obtain the outcome and efficiently used mediation and additional advisors.

“I have been so lucky to have come across your firm and will go back to the email and recommend your firm to others – Sarah was so supportive and knew when to make me stick to my guns and helped me know when to say enough!” Name Withheld 

If you find yourself in a similar situation, give Sarah Bevan Family Lawyers a call and we can help you navigate through the complexities involved with separation and family businesses.

family business divorce separation sydney

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