Divorce 'may impact family businesses'

There can be few people who have failed to notice the effects of the current economic downturn and the impact the recession is having on the economy.

It is also likely that those running their own business are even more concerned about the UK's continuing financial problems and how they are going to ensure their firm survives to see the end of it.

However, there is one other issue which many people may not have considered when it comes to threats to their business.

Published on the Cambridge Network, an article by Birketts LLP claims that a huge number of firms do not think about what the impact a divorce may be on the enterprise.

Whether the people involved are the owners or outside the company, how it is dealt with could have a serious effect on the financial consequences of the separation.

In the case of a family-run company, there are many considerations for those going though a DIY divorce.

According to the website: "Case law has demonstrated that there is no longer an assumption that a family business will automatically be protected on divorce; each case is individual and in terms of settlement many issues will need to be considered."

Some of the issues which will need to be taken into account by any couples considering purchasing a DIY divorce kit to arrange the separation themselves include the value of the business, whether control is to be kept or sold on, whether is it going to be passed on to children and whether the income from the venture can be shared.

Furthermore, if the firm is jointly run, will it be possible for the two parties to continue working together following the divorce?

Some advice has been offered by Birketts on how those in this kind of situation may be able to minimise the effect their divorce has on the company.

Non-business assets could be transferred to the spouse while liquid assets could be used to buy out an interest or pay out a lump sum over time.

"It is clear that in deciding what may be the best way forward for all concerned, more compromise and planning may be required in these uncertain times," the website concludes.

Meanwhile, businesses are not the only thing the current economic downturn is affecting when it comes to divorce

It was recently reported by the Independent that as increasing numbers of men are being made redundant in the UK, more want to get divorced from their partner.

This has led the Office for National Statistics to predict that if current divorce trends continue, half of all marriages may end up in separation.

It would appear, therefore, that the recession may impact upon far more people than those working for the immediate businesses and enterprises which are losing money.

Written by Rachel Crook

Published on: February 11, 2009

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