As we enter the festive season, we hope that it brings you all a time of peace and merriment shared with loved ones.

There is also the unavoidable reality that the first working Monday of the new year is referred to as Divorce Day, as a New year ushers in a desire for a fresh start.

In case you end up beginning divorce proceedings in the new year, you should be aware of how it may impact your high-value assets, including any businesses you may run.

We know that Essex is home to a wide host of entrepreneurs, so we want to make sure you are protected no matter what happens in your personal life.

How are businesses valued in a divorce?

You might be tempted to think that your business is completely separate from your marriage, particularly if your spouse had little to do with it.

However, businesses, like all assets, are included in the financial disclosure that must be made at the commencement of divorce proceedings.

It is best to get the value of the company independently verified to avoid any disagreement, as the court will insist on an independent valuation if you and your spouse disagree on its worth.

The benefits of getting the company independently valued means that it will be more accurate as the valuation should include the likely potential for future profits and turnover.

Will my spouse get half of my business in the divorce?

A 50/50 split is generally the starting point for most assets in a divorce, but that does not mean that everything will be split in that way.

Common outcomes include:

• · Retaining the business while your spouse receives a greater share of liquid assets
• · A structured buy-out, potentially over time, if funds cannot be released immediately
• · Selling shares
• · Joint ownership, due to ongoing financial ties

The exact decision made by the court will be influenced by a variety of factors, including the length of the marriage, financial and non-financial contributions, children’s needs, earnings and both parties’ future requirements.

Is there any way to protect my business from divorce?

If you are already looking to get divorced, it may be too late to fully protect your business.

However, if you are hoping to get married soon or are still content in your marriage, it might be worth taking steps to protect your business in case things do not pan out.

Pre-nuptial and post-nuptial agreements are both effective at gatekeeping your assets and ensuring that you have better protection in the event of divorce.

While not legally binding, the case of Radmacher (formerly Granatino) v Granatino [2010] UKSC 42 served to highlight the level of authority that the courts do give to these kinds of agreements.

At Palmers, we can assist you with the creation of pre-nups or post-nups because it is imperative that they are reasonable, fair and created without any pressure placed on either party.

If you are about to embark on divorce proceedings, we can also work to support you to protect your assets and advocate for a fair outcome that will leave both parties fairly compensated.

We know that for many small business owners and sole traders in Essex, your business is a core part of your identity.

For expert advice and support with divorce proceedings and other legal concerns, be sure to speak to our team today.