Business and Divorce
Divorce is often a sad time in people’s lives. It can cause distress and angst. Two lives that were entwined need to be untangled.
This can be more complicated when a husband and wife have intermingled love and business. You now want to go your separate ways and need to decide what will happen with the business. Will someone keep the business? Will it be sold? Or are you crazy enough to consider continuing working together as business partners? (This is not normally recommended). However, all things are possible.
If you have separated, it is essential that you get advice from a family lawyer who is expert in business and family law as soon as possible.
If you have a company or business this will form part of the property pool available for division after separation. You need a family lawyer that understands the business world and specifically:
- Shareholdings
- Directorships
- Officeholders
- dividends
- Division 7A loans
- Loan accounts
- Payments of wages to one or both parties and income tax
- Unpaid present entitlements
- Retained earnings
- Extracting assets such as vehicles from the business which will be retained by one person personally
- Capital gains tax
- Tax implications of the proposed property settlement;
- Trusts; and
- Most importantly, Family Law.
Tax and Divorce
There can be significant tax consequences when dividing assets because of separation or divorce. The payment of money or transfer of assets from an entity or business to one of the parties will most likely incur tax consequences. These will need to be worked out before a property settlement is reached and considered. If you fail to do this, then there could be serious tax consequences that you did not anticipate.
Business Valuation
Unless you and your partner agree on the value of the business or company it will need to be valued by an expert. Normally an agreed joint valuer is appointed by the parties to value a business. Until a valuation has been determined you won’t be able to move forward with your family law property settlement and make decisions about your future. Having said that don’t rush off and get your own valuation as it most likely won’t be accepted by the other party. You should engage a family lawyer as soon as possible to help you through this process.
Advice from a Family Lawyer
It is essential that you obtain expert advice from a family lawyer and from your accountant when going through a separation or divorce. Our Cairns Family Lawyers can connect you with the best experts to be part of your team to help you move forward following your divorce.
