Back
We continue to provide our legal services through the COVID-19 lockdown. Please visit our COVID-19 Hub for legal insights, or contact us directly.
Get in Touch Menu

Divorce - what happens to the family business?

10 May 2019

Where a family business is involved, divorcing couples and the court have to consider other factors. Associate Jonathan Eager in our family law team explains more.

Family businesses are often the source of much of a couple’s wealth, and indeed most of their future income. Once it has been established that a family business is an asset to be distributed as part of a divorce, the court and the parties have a lot of important decisions to make. They need to consider factors like the weight of the business valuation, and how that relates to the way other assets are divided.

Generally speaking, a business is considered a risky asset. In Wells v Wells (2002), the family business was compared to the more stable assets such as houses and was valued accordingly. This results in either the value of the business being discounted, or the party that keeps the business having a greater share of other assets (to reflect the fact that they are retaining the riskier asset).

Doubt was cast over this approach by the case of Martin v Martin (2018), in which the judge simply divided the parties’ assets equally (including the business), despite the fact that the majority of the husband’s award was made up by the shares in the private company. The wife retained the more attractive and less risky assets.

This case was later re-examined by the Court of Appeal, which reaffirmed the view that businesses are risky, and this has to be taken into account when valuing them.

It’s worth remembering that the family business is indeed a marital asset, but its value for the purpose of divorce may be a lot less than the value of other assets, like the family home or cash. With this in mind, you’ll need specialist advice when faced with a divorce or separation, particularly if a business is involved.

Senior associate, chartered legal executive, Jonathan Eager is a member of Resolution. An organisation committed to the constructive resolution of family disputes. He is noted for his expertise in national legal guide The Legal 500.

Contact

Contact
Jonathan Eager FCILEx
Senior associate
View profile
Jonathan Eager
Related services
Share this article
Resources to help

Related articles

Is my marriage legal?

Family, relationships & divorce

The Court of Appeal has recently ruled that an Islamic marriage ceremony falls short of the legal provisions for marriage under English law. As a result, the couple in question…

Sharon Giles LLB (Hons)
Partner

Domestic abuse during the COVID-19 lockdown: Q&A

Family, relationships & divorce

The lockdown associated with the coronavirus (COVID-19) outbreak has resulted in a dramatic change to daily life for most of us. Despite the necessity of lockdown to protect the NHS,…

Jonathan Eager FCILEx
Senior associate

Family law issues & coronavirus: Q&A 

Family, relationships & divorce

The coronavirus pandemic has thrown family life into a tailspin, and for those with current relationship, family and divorce issues, things may get even more complex while the crisis is…

Sharon Giles LLB (Hons)
Partner
Contact us