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Family Law calendar    Aug 18, 2016

Family Law: It’s Family Business - Part 1

When two people separate, they must unravel more than just their personal lives – they also must unravel their financial, social and sometimes their professional lives. But how does that work with family businesses?

When two people separate, they must unravel more than just their personal lives – they also must unravel their financial, social and sometimes their professional lives. But how does that work with family businesses? This article is part one of a two-part series which examines two circumstances to do with property settlements and family owned businesses. Our first topic of conversation? Where you and your partner co-own a business.

 

Living the dream

The ideal outcome of a property settlement between co-owners of a business is obvious – that parties would split amicably, remain friends and be more than happy to continue working in the business together for the sake of their mutual financial security. For the sake of certainty, ensure your lawyer has reviewed the company constitution, shareholders agreement, director’s agreements etc.

 

However, in reality, this is rarely the case. Often partners separate because they struggle to get along, a problem which ways equally on their personal and professional relationship.

 

The next best thing…

Considering that the above situation is more or less unrealistic, there are a number of alternatives you could consider:

  • If one party no longer wishes to be a part of the business, the other party can buy them out. The party who no longer co-owns the business can be compensated in other ways in the property settlement.
  • The business may be jointly sold and the net profit split between the parties.
  • Both parties may keep equity in the business but one party resigns as director of the business

 

Depending on your situation, Family Law is flexible enough to accommodate a range of solutions which meet your needs and wishes. However, in all these situations, some questions to keep in your mind are:

  • Are the company documents current and legally sound? It would be wise to review these documents and amend as needed to reflect any agreed changes or protect your interests.
  • Do you desire for your children to benefit from this business? This may factor into how the co-owned business is dealt with in a property settlement.
  • What will be your rights and obligations after settlement?

 

If you have a family law matter, concerns about your family business or questions about family law and separation in NSW and want to find out more please do not hesitate to contact us on 02 9688 6023 or email us at jfrank@franklegal.com.au

 Contact The Family Law Team For A  Free First Conference

This article is provided to the reader for general information. It is not legal advice. It was written by Andrea Spencer & Emily Graham and edited by James Frank.

More from the blog

Attributing a Value to your Family Business

Family Law and Business: Like Peas in a Pod

Property Settlement, Family law, Family Business, Small Business, separation

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