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Family Law calendar    Aug 22, 2016

Family Law: It’s Family Business - Part 2

When two people separate, they must unravel more than just their personal lives – they must also unravel their financial, social and even professional lives. But how does that work with family businesses? This article is part two of a two-part series which discusses property settlements and family owned businesses.

When two people separate, they must unravel more than just their personal lives – they must also unravel their financial, social and even professional lives. But how does that work with family businesses? This article is part two of a two-part series which discusses property settlements and family owned businesses. This article addresses the situation where you brought a family business owned by your parents to the relationship.

Your family business will be significant in a number of ways:

  • It counts as an asset of the relationship: Family law considers all the assets owned by parties to a relationship, regardless of when they were acquired and who owns them.
  • It counts as a contribution: Once the asset pool of a relationship has been totalled up, the law requires that the financial and non-financial contributions of each party to the relationship are weighed up. This includes any business you may have brought into the relationship.
  • It counts as a financial resource and points to your earning capacity: The next step in a property law settlement process is to way up the future needs of each party. If the business is doing well, it will point to your future earning capacity and may be considered a financial resource. Not taking into account any other future needs you may have, this will mitigate against an adjustment of the property pool in your favour.

But what does this all mean?

In practice, family businesses brought to a relationship rarely get split up in a property settlement. Reaching a property settlement is about compromise – we weigh up the contributions and future needs of each party to determine a split which would be just and equitable. The fact that you contributed a family business to the relationship will work in your favour. The fact that it points to your earning capacity does not really work against you, it just doesn’t contribute to any claim you may have to an adjustment of the property in your favour.

Say the split we reach is 50-50. The way in which we reach that 50-50 split is very flexible. Since you likely own your family business and its value is dependent on it remaining intact, you can simply consider the business to be part of your 50% of the asset pool.

However, with any family law matter, it is important to talk to a solicitor to ensure your business is protected. You don’t want to take a risk on a family legacy.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

 Family Law & Small Business Owners  Download the InfoSheet Here

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

It's Family Business Part 1

Attributing a value to your business in Family Law

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

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