Divorce and business ownership: why separation should be treated as a commercial risk
Family Law Partner Anne-Marie Hamer discusses the tension between divorce and business ownership, and why early planning, transparency and strong governance are essential.
Divorce is one of the most commercially disruptive events a business owner can face, yet it is often overlooked as a material financial risk. In an article for The Accountant, Anne-Marie explains why separation can have significant consequences for owner-managed businesses and why business owners should consider divorce within their wider risk management strategy.
During divorce proceedings, businesses are usually treated as marital assets. This means they may need to be fully disclosed, scrutinised and valued by an expert or Single Joint Expert appointed by the court. The court’s objective is to achieve a fair outcome, which can place a company’s ownership, records, liquidity and maintainable earnings under close examination.
Anne-Marie highlights that the court will take a holistic view of the business and the couple’s circumstances. Relevant factors can include when the business was established, whether it grew before or during the marriage, whether a spouse contributed to the business as an employee, adviser or in another capacity, and how business and personal finances have been managed.
Early intervention is critical. Business owners should ensure they can clearly identify controllers, shareholders and investors, and provide accurate financial disclosure, including accounts, profit and loss statements, bank accounts, tax returns and expenses. Clear record keeping and strong governance can help reduce uncertainty and support a fair assessment.
The article also considers the role of pre- and post-nuptial agreements. Although not automatically binding in the UK, they can be persuasive if properly prepared, fair and supported by legal advice. These agreements may help clarify whether a business should be treated as separate property, how it should be valued, and how future growth may be approached.
Anne-Marie concludes that separating personal and business interests wherever possible is key. Separate bank accounts, documented decision-making, clear salary and dividend policies, wills and appropriate business structures can all help protect a business owner’s position.
While the personal and professional can be difficult to untangle, careful planning, transparent records and early advice can make a meaningful difference when a business becomes part of divorce proceedings.
Read the full article here: Divorced from reality: The impact of separation on business
