Separating the business when you separate

On separation it can be difficult to distribute a reasonable payout to the partner who is leaving the business, without losing the business itself.  Goodwill can assist both parties. 

It may be that settlement payments can be made over time, either in large capital amounts or in smaller, more regular “income style” maintenance payments.  These may be secured by a charge over, or interest in, the business. 

Superannuation funds can be split in favour of the “non-business” spouse, and may be promptly accessible when near retirement age.  Often real estate is heavily secured against the debts of the business.  It may be that other family members or a new partner of the “business spouse” are willing to provide some security to free up real estate (or other assets) being transferred to the non-business spouse.

For partners who get on reasonably well, other options may arise.  Both parties may be willing to take a significant reduction in their own assets to pass ownership of the business on to their children, potentially remaining as employees or consultants.  These are more complicated arrangements requiring higher levels of goodwill and agreement. 

A Court will try to end financial relationships between parties.  It will not rely on the generosity of others, or succession plans for others, to reach a solution. 

Tags: Family Law