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Protect Your Assets in a Divorce


Media portrayals of heterosexual “power couples” splits in 8 out of 10 cases portray the woman as a dependent, someone who’d stop at nothing in her quest to take as much away from her CEO husband as possible. However, English law is nowhere near that simple. My name is Naomi Burgess and this is a post for female entrepreneurs to help them protect their business assets.

Divorce happen anytime

If you’ve created your business before you got married, it’s quite possible that it won’t be considered matrimonial property and you’re relatively safe, although you should still consult your lawyer about that. However, if you’ve launched your company after you got married, chances are that there would be an equal division of the assets because the company would likely be considered matrimonial property. There’s no way to predict whether that would happen for sure because today, the courts take into account all the assets owned by both spouses and many other individual circumstances, such as children and non-matrimonial property, and each divorce case is decided on a case-by-case basis.

Advice on securing your company

So what can you do to protect your company? When going through a significant change in your life such as divorce, you should engage a financial planner who can help you navigate these financial changes. Firstly, make sure you get legal advice at the earliest possible stage of the divorce. The lawyer would guide you through the process of mediation which is a procedure that would be a good opportunity to peacefully discuss and negotiate the terms of distributing the assets. You should keep in mind that the outcome of mediation, or any other alternative means of dispute resolution, would usually depend on what kind of business you’re running, your revenues, your annual profits and its general state. If your husband is involved and wants a part of it, it’s possible that you wouldn’t be able to resolve the issues with the help of mediation and unfortunately, you might end up facing each other in court.

Seek legal counsel

If it does come down to court proceedings, you shouldn’t make any rush decisions. For instance, don’t vote your husband out of the board of directors, pressure him to sell his shares, or fire him. There are many legal ways he can fight all of the above, and it would make you look quite bad in court and would lead to some very negative consequences for you and your company. Instead, you can try and get some advice from your lawyer as to how to safeguard your assets and ensure that your husband only has limited access to them. And this doesn’t mean unlawfully concealing them, either. Courts would be able to prevent that from happening and if worst comes to worst, they would be able to freeze your assets entirely. Therefore, you should get legal advice before you do anything, so that your divorce proceedings don’t take longer and be more stressful than necessary.

What is veil of incorporation?

There is a concept in English corporate law called “lifting the veil of incorporation”. If you’re not a sole trader or a partner in a partnership, your business is probably a company, which enables you to have limited liability and prevents the courts from accessing your personal assets to pay off the creditors of your company. However, if you try and relocate your company’s assets by moving them into your personal accounts, courts would have an opportunity to “lift the veil of incorporation” and access them in order to enforce any decisions. If that happens, not only would you lose a large portion of your company, but your personal assets might also take a hit.

Agree on distribution in the future

Once the divorce proceedings are wrapped up, you should keep in mind that unless the agreement between you and your husband regarding the distribution of your assets is agreed via a court order, it isn’t necessarily enforceable. If the agreement isn’t binding, the husband would be able to make a claim against you in the future if your business expands and grows and he wants a piece.

Pre-nup agreement is important is you have assets/businesses

No matter how good of a lawyer you have, divorce proceedings aren’t going to be pleasant. In order to make them as smooth as possible in the future, consider drafting a pre-nuptial agreement before you get married next time. While there are very few precedents of them being enforced in England and Wales at present, the courts are starting to take them into account when deciding to divide the assets between the former spouses. A well-drafted pre-nuptial agreement can truly help you protect your business assets in case of a divorce.

How important is pre-nup agreement?

In general, if you want to avoid messy and complex divorce proceedings, you should be cautious before you get married. A pre-nuptial agreement is one way to protect yourself, but there are also other things you can do. For instance, you should carefully consider whether you want your husband to have a majority stake in your company, or be on board of directors. If you decide to hire him as an employee, draft his employment contract as carefully as you would everyone else’s, and don’t forget about confidentiality clauses – goodwill is a large asset for any business, and if your divorce isn’t as peaceful as you hoped it would be, a well-drafted confidentiality clause in his employment contract would prevent him from damaging it by, for example, slander, or selling information about your company to competitors.

Fortunately, in today’s legal and business world, it’s illegal for the husband of a female entrepreneur to get special treatment in the process of assets division just because he’s a man. Nonetheless, you should be very careful when you decide to bring him on board and obtain legal advice at the earliest possible opportunity about how to protect yourself in the event of divorce proceedings. If you do so, you have a higher chance of keeping all the assets of your business.



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