How can I protect my business if I divorce?

Written by Isabelle Douglas

Nobody starts a business or gets married expecting things to go pear-shaped, but divorce can have serious implications for business owners. Here are some practical steps to safeguard your interests and make sure your business lives happily ever after:

Understand the law

Under the Family Law (Scotland) Act 1985, matrimonial property, which includes businesses started during marriage, is shared fairly (which means equally unless an unequal division is justified by special circumstances). Businesses started before marriage are generally not matrimonial property, but may become matrimonial property if altered during marriage

Beware of changes

Converting a sole trader business into a company or transferring shares to a spouse can unintentionally make your business matrimonial property. Seek advice before restructuring.

Consider contributions

Even if your business isn’t matrimonial property, a spouse may make a financial claim if they contributed financially or otherwise to its growth.

Plan for co-ownership risks

If you and your spouse co-own the business, separation can lead to disputes over control, profit sharing and differences in the value of the business between family law and company law.

Act early

The best protection is proactive planning.  Seek legal advice before marriage or altering the business structure

Use agreements

A well-drafted Pre- or Post-Nuptial Agreement can clarify how business assets will be treated. Complement this with updated company documents like Partnership or Shareholders’ Agreements.

Taking these steps provides certainty, reduces risk and helps secure your business during challenging times. If you need any support, contact a qualified solicitor to provide expert advice.