There are few certainties in life, but it’s fair to say that the specter of divorce will remain commonplace for as long we continue to marry.
Even though the divorce rate in the UK has recently fallen to around 42%, divorce is an unfortunate and inevitable feature of modern life. This is also an immensely emotive and harrowing experience and one that can cause significant acrimony among previously loving couples.
We’ll explore this further in the post below while asking why it’s important for you to separate your personal and business lives when going through a divorce.
Why you Need to Separate your Assets in Anticipation of a Divorce
Not only is divorce and emotionally challenging experience, but it’s also one that can create significant financial issues. More specifically, you’ll be required to pool all shared and marital assets, while even those that existed prior to wedlock may need to be valued and distributed between two parties.
This definitely applies to all personal assets, including properties, bank accounts, and shared investments. In the case of real estate, this type of shared, high-value asset is usually sold for a cash sum, before the proceeds are split between the two individuals in question.
While this issue may be a little more complex for business assets, this can also come under significant scrutiny during a divorce. It may be independently valued, for example, while its liquidity and turnover may also be used by judges to determine whether or not it can be leveraged to pay out claims from the wider family.
This could be financially devastating for business-owners, so it’s crucial that you separate this type of asset class and safeguard it where possible. Even if you didn’t sign a prenuptial agreement prior to tying the knot, you’ll need to think proactively and take decisive steps towards protecting your business interests.
When liaising with reputable legal representatives such as Withers Worldwide, one of the first things they’ll recommend is that you draw a clear and enforceable line between your business and personal assets. This means completely segregating any profits generated by your business from your private wealth, preferably through the use of a separate bank account.
Similarly, it will help your cause if the family home was not used to secure borrowing within the business, as this can complicate the divorce process and see multiple claims made on your venture.
The Last Word
If the business is a pre-marital asset, we’d also recommend that you retain sole ownership of the venture, despite the various tax advantages of involving a spouse in the corporation.
By following these steps and separating your personal and commercial assets, you can effectively safeguard your business interests and build towards a more prosperous future after your divorce.
Hope this helps…Thanks