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Jul 13, 2016
From a small family owned bakery to a Trump-style multi-holding corporate empire, businesses come in all shapes and sizes. As such, family law settlements also come in all shapes and sizes. This article considers more complex business holdings which may have multiple holding companies and/or trusts.
These kinds of business structures offer a number of advantages to business owners. For example, establishing a trust to hold shares which then distributes the dividends to beneficiaries provides asset protection and flexibility for business owners or owning the majority share in a holding company which controls and operates other companies including small local businesses and/or large international firms also providing tax benefits as well as protection to owners/shareholders.
How does this impact family law?
Well, the problem is that often the actual ‘value’ of a business is split between several structures. The trading company may have a negligible value because the majority of the company’ profits are funneled into a trust fund for distribution to the beneficiaries. Alternatively, a business which licenses intellectual property or a social networking platform will have need to be valued and understood differently to a service provider which has most of its value tied up in infrastructure.
What does this mean for you?
This means that disclosure is VITAL. Trust deeds, corporate financial statements, shareholder agreements and company tax returns must be disclosed so the full extent of your complex corporate assets can be mapped out.
Failure to do this may result in the business assets being valued either overestimated or underestimated. This also renders you in breach of your family law obligations and mean your undisclosed assets may be liable for a future property 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 9688 6023 or email us at info@franklegal.com.au
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.
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