Can I sell my business before divorce in the UK?
Yes, you can sell a business before divorce. If you happen to be the exclusive owner of your business, divorce
proceedings usually won’t affect your business decisions. However, the court could consider the sale proceeds as marital assets, entitling your spouse to a percentage in some circumstances.
You must also disclose the sale proceeds to the family court, so think carefully about selling your business before the divorce. If you are unsure, it’s a good idea to get legal advice before doing anything.
What should I consider before selling a business before divorce?
- Potential regret: Making significant decisions, like selling a business, during the emotional distress of a divorce may lead to regret. Wait until emotions have settled to better understand your needs and desires.
- Long-term consequences: Think about the long-term effects of selling your business, especially if you have children. Selling could prevent them from taking over or benefiting from the business.
- Timing matters: The timing of a business sale can affect your taxes, so consult a registered accountant for guidance.
- Spouse's job: If your spouse works for the business and loses their job due to the sale, they may be entitled to spousal maintenance.
When is selling a business before divorce a good idea?
- Joint ownership: If a business is jointly owned and run by both spouses and neither of them agrees to give the other their shareholdings, selling the business might be the only option.
- Clean break: Selling a jointly owned business could facilitate a clean break. A clean break ends all financial ties between you and your ex-spouse after divorce.
- Final settlement: An ongoing business can complicate the evaluation and division of business assets, leading to drawn-out negotiations or disputes between the parties.
- Fresh start: The sale proceeds can give each spouse the money needed to start over and pursue personal and financial objectives.
How a business is calculated and divided in divorce
If you and your ex-spouse own or have a stake in a business, it is usually valued as part of the financial settlement. For jointly owned businesses, either spouse can arrange a valuation. However, if only one spouse owns a business interest, that person would be the one to request the valuation.
Business valuation is a complex process therefore, appointing an expert lawyer, accountant, and valuer may be important for an accurate evaluation. A business evaluation can be based on the following criteria:
- Assets: This includes things like property or stock that the business owns.
- Earnings: It looks at the expected future profits of the business.
- Business structure: This considers whether it's a limited company, a sole proprietorship, or a partnership.
How Can GloverPriest Help?
At GloverPriest, we provide friendly and transparent family law advice. If you would like further help on divorce, please don’t hesitate to speak to one of our expert family lawyers today. Complete our enquiry form.