Dividing Business Assets in a Divorce: A Comprehensive Guide

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When a couple decides to divorce or separate, one of the crucial aspects that must be addressed is the equitable division of assets, also known as a property settlement. While this process often involves assets like homes, cars, money, and retirement funds, it can become exceptionally difficult when complex assets, such as a business, are involved.

In this article, we’ll explore how the division of business assets in a property settlement should be handled, including the necessary steps to ensure a fair outcome.

Property Settlements and Businesses

The dissolution of a marriage or de facto relationship can have significant implications for a business. Whether the business is jointly owned by both parties or solely by one, it is considered part of the marital property pool, potentially affecting not just the couple but also any other stakeholders in the business.

What Happens to the Business in a Breakup?

In most cases, regardless of whether the business is owned by one or both parties, it is considered an asset subject to division in a property settlement. However, exceptions apply. If a prenuptial agreement outlines how the business should be treated in case of a breakup, it may not be included in the property settlement. Similarly, the parties may agree that the business represents an income stream and otherwise its value is simply it’s net assets.

If neither of these exceptions applies, the business is likely to be an asset subject to division. As such ascertaining the value of the business is step one.

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Who Gets the Business in a Property Settlement?

The outcome of asset division can vary significantly depending on the unique circumstances of each case. For a business, several possibilities exist:

  • One spouse may buy out the other’s interest in the business.
  • The business may be divided, with each party receiving a share.
  • The business could be sold to a third party, and the proceeds divided.
  • The former spouses might continue to jointly own and operate the business.

The best course of action depends on the specific situation. Some couples maintain an amicable relationship and can continue business operations seamlessly, while others face irreconcilable differences.

It is strongly advisable to seek legal advice before making any decisions regarding business assets during a property settlement, as the long-term consequences can be significant.

What if an Agreement Cannot Be Reached?

While the Australian family law system encourages parties to reach agreements outside of court, complex property and asset matters, such as those involving a business, may require court intervention when negotiations fail.

In such cases, both parties can apply to the Federal Circuit and Family Court of Australia for a property settlement. The Court will likely use a four-step process to determine an equitable distribution of assets, including the business. The Court will likely require an independent valuation of the business. Learn more about the four-step property settlement process here.

The court’s decision is aimed at finalising the financial aspects of the divorce, which may involve one party receiving the business while the other receives equivalent assets, or, if that’s not feasible, ordering the sale of the business. The ultimate goal is to ensure a just and equitable property settlement.

Protecting Your Business

Protecting a business from the impact of a relationship breakdown is possible, but it’s essential to engage a lawyer to guide you through the process. Whether you’re considering marriage, already in a relationship and own a business, or planning to start a business while in a relationship or marriage, legal options are available.

One effective method is to establish a binding financial agreement that outlines how assets will be managed in the event of a relationship breakdown. Given the intricate nature of relationships and businesses, seeking legal advice is highly recommended to safeguard your business and other assets.

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Consult with Our Property Settlement Family Lawyers

If you’re facing separation and struggling to reach a property settlement agreement or if you want to protect your assets, our team of experienced family lawyers at Clarity Lawyers is here to assist you.

We provide expert advice, guidance, and representation for various family law matters, including complex property settlements and divorce all over Australia. Contact us today at 02 4023 5553 or book a no-obligation consultation to discuss your specific situation.


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Rli Samantha@2x
Samantha Miller

Samantha has been a lawyer since 2001 having followed in the steps of her father, grandfather, great-grandfather and great-great-grandfather. No one can say she didn’t know what she was getting into!

Initially admitted in 2001 as a solicitor in NSW and Australia, Samantha moved to the UK where she was admitted as a solicitor in England and Wales in 2002. After working in several different areas of the law in large London firms, she determined that family law was her calling and hasn’t looked back.


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