6 Ways To Lessen The Impact of Divorce on Your Business Under UK Divorce Law

6 Ways To Lessen The Impact of Divorce on Your Business Under UK Divorce Law 2

A look at some key issues that can arise under UK divorce law

Laura Syme* With around 40-50% of first marriages resulting in divorce or separation, dividing financial assets is a source of pain and anxiety for many. When a business is part of the negotiations, the effects can be intensified and a source of major concern for the parties concerned, particularly when all assets owned by either party, from the family home to businesses, investments, pensions and savings can be divided by the court during a divorce under UK divorce law.

The first port of call in lessening the impact of divorce is to know where you stand. In the case of business ownership there are additional complications, depending upon the nature of the business, its profitability and financial obligations and the type of business it is – be it a large concern, a sole trader operation, a partnership or whatever.

Getting clued up on all the general facts is important and so read some material about UK divorce law and by reading law firm content such as Divorce Guide Finances & Settlements is an ideal starting point to help you get well informed on the divorce law legal aspects.

Consider some of the key ways you can reduce the impact of divorce on your company under UK divorce law. 

  • Draft a prenuptial agreement 

Firstly, if you have not yet married and have your own business, you should consider drawing up a pre-nuptial agreement with your future spouse. This is especially useful if you have significant assets within your business. In this agreement you can outline what would happen to the business in the event of a legal separation.

Here, you should think about whether or not you want to include your company as a marital asset. If you are already married, then you can also consider getting a post-nuptial agreement as this can be acquired at any point in the marriage, providing both parties agree to the terms.

Although no one goes into a marriage wanting to think about divorce, if you have a business, it is wise to give this full consideration.

  • Keep your finances separate

During a divorce, a court will look at all the joint financial assets a couple has. They will also consider whether or not a business provides income and a certain standard of living to both parties. UK divorce law will consider a variety of factors when deciding how assets should be divided, including child and healthcare issues that can impact upon the financial position or earning potential of one partner over the other.

If there is business income then it is wise to keep other financial assets distinct from your company. For example, if you have equity in your marital home, do not use this as capital to put into your business. Keeping finances separate will cause less complexity during financial proceedings. 

  • Consider putting your business into trust

By putting your business into trust, you are removing your name from it, and therefore removing it as a financial asset to be considered during a divorce.

Doing this means you will no longer own the company legally and the trustee will have control of its assets. However, bear in mind that there are legal rules that apply to this, and if the courts deem the move of your business into a trust fraudulent then the business will be brought back into the equation. It’s also worth noting that trusts can be complex and expensive to set up. 

  • Make periodical payments to your ex-spouse

If you have not taken precautionary measures before you divorce, you can negotiate with your ex to provide them with periodical payments, therefore retaining your business. This also means you can avoid having to pay a lumpsum all at once. 

As always, remember that to achieve a fair and reasonable arrangement without the need to litigate will vastly reduce the stress and expense of any separation.

  • Consider other marital assets 

In a divorce, all financial assets are considered in the ‘marital pot’. If you want to maintain control of your business, offering your former spouse a higher proportion of another asset such as a property, or pension can be a good avenue to go down. 

  • Sell the company or a stake in it 

Although this may be last on your list, selling is an option. In cases where a partner is involved in the business by working for the company or owning shares, it can often be the only solution. Upon the sale, both parties will be entitled to a share of the sale proceeds. 

If the business is not sold or if it is not practicable to sell it then a good appraisal of the business is necessary and ideally you should try and agree upon a single, decent appraiser to (once again) reduce the otherwise high expense coming with getting separate valuations made and then – possibly – arguing in court about their respective merits.


Lessening the impact of a divorce requires forethought, but there are other options to consider if you are already going through the process. In complex financial matters relating to divorce, or indeed even for relatively simple divorce law issues, having some decent and practical background knowledge and the support of qualified professionals to assist in the process is important.


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