If you and your partner have been in business together and then you get divorced, it throws up many question marks around what happens to the company’s assets. In some cases the divorced partners can remain in business together, with one taking a backseat, in most cases however, the business will have to be closed, split up, or one party will buy the other out. If the business will not be continuing as is, then the property which the business owns will have to be a dealt with.
If you are in this situation then it is always best to first get some legal advice. When it comes to family lawyers Sydney has a wealth of talent, speak with them and find out exactly what to do in your individual situation. If we look at this generally, here is what we often see happen in these types of cases.
Business Owner
When it comes to the court taking decisions, they very rarely look to break up the business, this will only be done if the two partners have decided that this is the best way going forward. What the court will generally look to do with the assets of the business such as the property, it is to give all ownership to the person who legally owns the business. In such a situation, if one partner is the legal owner, the other partner will be sufficiently compensated to the value of the business’ assets.
Split Ownership
If there is a straight up 50:50 ownership split between the two partners then the first thing which will happen here, is that the business will be locked. What this means is that neither partner is allowed to make any decisions in the business, without the agreement of the other. The business, and any property owned by it, will remain like this until a decision has been made with regards to what the future of the business will look like.
Disputes
If there are any disputes regarding who will take over ownership of the company, and therefore who will get the property in its name, the courts will step in. The court has the power to transfer ownership if it so wishes. If neither of the couple are in a financial position to buy out the other, then the courts will work with both parties to put in place rules of business responsibilities, which would enable the business and the spot ownership to continue, without the two parties having to work together. Ultimately this is something which neither spouse wishes to do, and it usually results in one party exiting the company. Should this happen, then we go back to point one which is that the owner keeps any property and the exiting partner is recompensed according to the valuation of the company and its assets.
Being in business together when going through a divorce certainly adds a layer of difficulty to the splitting up of assets, always seek legal advice to find out what the best approach is in your specific situation.
