Navigating a separation or divorce when you own a business can be especially challenging and emotionally demanding. We are experienced in ensuring that at each step our clients are well-advised about the process. We provide the best commercial and family legal assistance to help you make the crucial decisions required during this time.
PCL Lawyers has significant experience in acting in commercial law matters for SMEs and individuals. Our family lawyers are commercially minded and work hard to resolve issues and provide pragmatic advice concerning your business and implications in a family law settlement.
Together, with the skills of all our team from both disciplines in law, we provide our clients with excellent outcomes. We ensure that not only your family law agreements are well drafted and negotiated but we can also assist with any commercial agreements and issues that arise during a family law settlement or beyond.
When marriages or relationships come to an end separating the assets when you own a business can make the process more stressful.
There are a variety of business structures such as partnerships, sole traders and small to medium businesses. Each have different implications as to how they are treated in a family law settlement.
We understand that when running a business, divorce and separation is a major disrupter. The reality of maintaining business operations, planning and considering possible outcomes such as whether to sell the business or not means it is critical to obtain concise legal advice from solicitors.
Careful legal planning for business owners and advice on your individual circumstances is key to the best result. Having clarity and a family lawyer and sometimes a business lawyer who understands the process and commercial ramifications will help you through a property settlement. They will quickly pre-empt and prevent issues from arising.
Family lawyers start with a top-down view and ask “how would the Family Court ultimately decide on your matter”. Having experience and understanding on what guides how decisions are made in family courts assists family lawyers to achieve a settlement between the parties prior to court proceedings.
A business or business assets such as shares or family trusts are considered by the Family Court to be property (or marital assets) within the meaning of the Family Law Act. They are therefore treated in a similar way to the family home.
As a quick overview, in deciding as to who gets what in Family Court, look at a variety of items such as:
Family Law matters are often settled outside of court and parties encouraged to do so by the Court system. Couples can reach a settlement agreement and obtain a Binding Financial Agreement by agreement in negotiations, mediation or arbitration.
A Binding Financial Agreement can be made by the parties and can also be made into a consent order by applying to the court. This gives the agreement more force so that penalties can be pursued if the agreement is not adhered to.
If you cannot resolve your financial separation through these alternative means the only other avenue is to have the matter decided at court.
The Family Law Act considers all business interests and structures such as family trusts, sole trader, partnerships and corporate and trust structures to be a part of the property pool.
To determine the financial value of property pool including complex assets structures and businesses there will need to be valuations of these assets.
As a part of determining the value of the property pool the couple are obliged to give full and frank disclosure of financial records during the negotiations.
Having experienced lawyers assist with the process of engaging and liaising with a valuer can dramatically improve the outcome. This is done by ensuring that all issues in the business or asset are given proper consideration by the valuer.
If one party is not forthwith with providing records, or proves to be difficult, experienced family lawyers can seek applications to the court for intervention.
Sole Traders are a typical business structure that people choose when they are the key person conducting the business. The value of these businesses are often linked to the key person and certain criteria can impact the valuation multiple of the business.
Our family lawyers understand the business valuation process is key for parties that are seeking an accurate valuation for their business. They will make sure the relevant information, to increase (or decrease) the valuation, is considered carefully by the valuer.
Many small businesses are actually partnerships and these are also dealt with in a family law breakdown. This can be difficult when you and your spouse are the business partners. The same processes apply and the partnership is considered in the asset pool.
If the business is a Pty Ltd or a publicly listed company then depending on the role and stakeholding of each party the financial settlement can be affected.
In typical and simple instances, for asset protection, there will be one party as a director and the other as a shareholder or a trust structure as a shareholder.
Depending on who is in control of the company and shareholding can affect the process.
Shareholder agreements can be used as a part of financial settlement agreements. They should be carefully drafted to ensure the rights and process are clearly outlined. Proper consideration needs to be given to the class of shares, voting rights and disposition or sale of shares etc.
A family trust can still be considered part of an asset pool available for division between two parties. The main thing to consider is whether or not one or other of the parties has care and control of the trust. If they do then it is likely that the trust will be included in a family law settlement.
Often couples can be involved in running the business together even after they separate. Where this can be continued, it is encouraged for the better financial outcome of both parties. Often your business is one of your largest assets.
Depending on the corporate structure there may be duties both parties have to the business such as directors’ duties as defined under the Corporations Act.
Getting an initial agreement on how the business is to continue to run and under what roles can be crucial to the smooth operation of the business. This will also minimise the impact of the family dispute on the business.
Such issues such as loans, overdrafts and any personal guarantees will also need to be considered when you are separating or divorcing. Depending on the security and what restructuring, if any, needs to take place dealing with the debts and ongoing liabilities can be complex.
Having a family lawyer who understands the commercial elements of refinancing and restructuring can assist in this process. Part of the role of your family lawyer is to see that you are protected against future claims and liability.
If you are a business owner, we can also assist in providing advice around with asset protection of your business if you are contemplating entering into a de facto relationship or marriage. Having a Binding Financial Agreement before-hand can assist in resolving family law property settlements. This can provide you with certainty moving forward into a new relationship.
It is also wise to consider whether you have the right structure and proper documentation in place for succession and estate planning as well.
We offer our clients the very best legal advice and act for SMEs, organisations and Individuals. We clearly understand the commercial and family law issues surrounding separation and divorce when you own a business.
Our family law team aims to provide the very best quality of work and professionalism. We are commercially minded and consider the commercial needs of our clients and their desired outcomes.
Our team at all levels work hard to provide a high quality of customer service.
Contact us on 1300 907 335 or complete an online enquiry form and we will be in contact with you promptly.