If you are wanting to Separate, and involved in a business, here are 3 important things to know!

If you are considering separation or amid a relationship breakdown, the way a business interest is treated can be rather confusing. Family businesses represent 67% of all Australian businesses and so it is not uncommon for questions to arise about their inclusion in a Family Law property dispute.

Documents

• It is very common to feel unsure or hesitant around how the financial documents of a business should be treated when you separate from your spouse.
• The short answer is, if it is a business in which either of you have some sort of ‘control’ i.e. are business owners, the documents are relevant and should be made available to your spouse so they can understand the relevance of the business to your Family Law property settlement.
• Arguments may arise around confidential aspects of the business, but essentially the structure of the business and therefore its value in the Family Law split must be known and are only revealed through providing documents.
• It may be that you find yourself stuck in a fight about whether the documents must be provided. If you believe there is a strong reason as to why the documents should not be produced, it might be worth putting up a fight. It is important to understand what the cost vs benefit is when pursuing such a fight. Sometimes it is worth putting up the fight, but a lot of legal fees can be spent unnecessarily.
• If the documents are not forthcoming, it is likely to bring on urgent court proceedings and the ability to force the documents to be revealed directly from accountants/financial planners through a subpoena.
• The Family Law world encourages transparency, and if you find your spouse being secretive, there are far reaching powers to get the information released.

Income

• In some cases, ‘the business’ may not have a significant value to the parties if it were to be sold, but the income that is generated from the business activities is significant to assisting the family, the expenses and eventually the income of one of you.
• If the business operates via a trust or company, there may be “distributions” made to other family members, who may not be active in the business. The beneficial loan accounts of any of these family members are relevant and if that income is not distributed, it may be a personal asset of that family member.
• If the income of the business is being distributed to both spouses, but one is only actively working in the business, you will need to understand how to treat that income at a point of separation.

If you are separating or looking to separate from your partner and your family has a business, I can help you to understand the tips and navigate the various traps. I have experience in understanding complex asset structures, involving various third parties. The issues of whether documents should be provided where they contain sensitive information and understanding the value of a business are areas in which I enjoy guiding my clients. Don’t be scared of the unknown, I can help empower you to handle the business during an otherwise very difficult time of separation.