Unfortunately, the fallout of a relationship breakdown often reaches much further than the personal lives of the two parties involved. This is especially true if one party owns a business with a business partner who is not a party to the relationship. If this is you, you are probably wondering – what does a Family Law property settlement have to do with my business? Well, keep on reading for three key things you need to know if your business partner is going through a separation.
Businesses owned or part-owned by parties to the relationship are considered when valuing the total asset pool. This is because the business was likely supported in some shape or form by the husband or wife of your business partner, whether through childcare, financial support, moral support etc. At marriage, assets are more or less lumped together and considered to be shared by both parties. Moreover, businesses may also be considered a financial resource and/or indicate the future earning capacity of one party in a property settlement.
If you don’t know it off the top of your head, now is the time to pull out all your paperwork and figure out how the business is structured. Is it a partnership? Are you both directors? Who owns the shares? You need to know the right and obligations of both you and your business partner. This is because your respective roles and interests in the business will determine the extent to which the business, or shares in the business, are up for grabs.
You need to know that businesses are rarely dismantled through Family Law property settlements. After all, often the party who does not own the business does not want to take on the extra work and liability. Usually, the existence of a business and the added financial benefits it provides one partner are addressed elsewhere in the settlement, through a lump sum payment or transfer of another asset.
However, while these three tips are great, the best advice we can give you is see a lawyer. Don’t take a risk on something as important as your business.
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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
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.
Property Settlement, Family law, Family Business, Small Business, separation
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