Is my partner entitled to my business assets if we divorce in Northern Ireland?

Divorce can be a stressful and emotionally taxing process, particularly when it comes to the division of your assets. If you are a business owner facing the prospect of divorce, you will probably also be concerned about whether your partner is entitled to your business assets. 

This blog will explore how your business assets are treated in divorce proceedings; the potential need to split your personal savings; alternative methods for asset division; strategies to protect your assets; and the role of a lawyer in helping you safeguard your interests.

Protecting assets: what happens to my business if we divorce in Northern Ireland?

In Northern Ireland, divorce law operates under the Matrimonial Causes (Northern Ireland) Order 1978, which governs the division of assets. When you divorce, the Court will generally treat your business assets as part of the marital estate. This applies to every type of business, including sole traders, partnerships, and limited companies.

With business assets, as with all other matrimonial assets, the Court aims to achieve a fair and equitable distribution, which does not necessarily mean an equal split.

The Court considers several factors, including:

1. 1. The welfare of any children: The needs of any children from the marriage are a primary consideration. This includes ensuring their financial stability and maintaining their standard of living.
2. 2. Financial needs, obligations, and responsibilities: Both parties’ financial situations, including their income, earning capacity, property and other financial resources, are examined.
3. 3. Standard of living: The standard of living enjoyed during the marriage can influence how assets are divided.
4. 4. Age and duration of marriage: The age of both parties and the length of the marriage play a role. Longer marriages may lead to more substantial claims.
5. 5. Contributions: This includes not just financial contributions, but also non-financial contributions such as homemaking and caring for children.
6. 6. Conduct: In rare cases, conduct that is deemed gross or obvious may be considered, though this is not common.

The Court will generally try to maintain the existing status of the business, rather than order you to give up or share your business interests. However, you should then expect the Court to make an adjustment in the division of other assets to account for the business’s value. The valuation of the business is therefore crucial and typically involves expert accountants or business valuers. 

Divorce in NI: Do I have to split my personal savings with my partner?

Any personal savings that you have accumulated during your marriage are generally considered part of the marital estate and are, therefore, subject to division when you get divorced. This includes savings in bank accounts, investments and any other liquid assets you own.

The Court aims for a fair division, taking into account the same factors mentioned above. However, if you acquired your personal savings before getting married, through inheritance, or as a gift made specifically to you and not your spouse, they might be considered non-matrimonial assets. Nevertheless, if these assets have been mingled with your marital finances or used for family purposes, they could be treated as part of the marital estate.

It is essential that you provide clear documentation and evidence to support any claims that certain savings should be excluded from the marital estate. Without such proof, the Court is likely to consider all savings as joint marital assets.

Is there any way we can split our assets differently?

There are several ways you and your partner can agree to split assets differently than what might be ordered by the Court. For example, if your partner is not involved in the business, you might decide to give up a certain share of alternative marital assets (e.g. the family home, savings, and investments) equal to the value of your business, a process known as ‘offsetting’. This ensures that you both receive a fair settlement and keep your business intact. And if your spouse is involved in the business, you can potentially negotiate to get them out, thereby ensuring the business can continue to operate.

One common method for formally arranging the division of your assets is through a consent order, which is a legally binding agreement reached between both parties and approved by the Court. This order outlines how you plan to divide your assets, including your business assets and personal savings.

Negotiation via legal representatives can be an effective way for you and your spouse to reach a mutually agreeable settlement. This can be a less adversarial and more cost-effective method than going through court proceedings.

In some cases, a prenuptial or postnuptial agreement can outline how you and your spouse intend to divide your assets in the event of a divorce. While not automatically binding in Northern Ireland, these agreements are increasingly being given weight by the Court, especially if they are deemed fair and both parties had independent legal advice when entering into them.

How can I protect my assets during a divorce?

Protecting your business assets during a divorce requires careful planning and strategic action. Here are several steps you can take:

1. 1. Keep detailed financial records: Maintain comprehensive and accurate records of all business transactions, personal savings and any other financial matters. This transparency can help clarify the value of your assets and support your case.
2. 2. Separate business and personal finances: Avoid mixing your business and personal finances. This separation can help demonstrate that certain assets should remain with the business and don’t form part of the marital estate.
3. 3. Consider a prenuptial or postnuptial agreement: As mentioned, these agreements can provide a clear framework for asset division in the event of a divorce.
4. 4. Business structure: Evaluate your business structure. For instance, a limited company might offer more protection than a sole proprietorship. Consider including clauses in the company’s articles of association that restrict the transfer of shares without approval.
5. 5. Trusts: Setting up a trust can sometimes protect your assets by placing them outside the reach of divorce proceedings. However, this is a complex area of law and must be handled carefully to ensure it is effective and legally sound.

How can a lawyer help me when I divorce?

A lawyer plays a crucial role in helping you navigate the complexities of divorce, especially when there are business assets involved that you want to protect. Here is how a lawyer can assist you:

1. 1. Legal advice and representation: A lawyer can provide you with tailored legal advice based on your specific circumstances and represent you in negotiations or court proceedings.
2. 2. Valuation of business assets: Lawyers can coordinate with financial experts to ensure an accurate valuation of your business, which is essential for a fair division of assets.
3. 3. Negotiation and mediation: Skilled lawyers can help negotiate settlements that protect your interests and facilitate negotiations to reach an amicable agreement between you and your spouse.
4. 4. Drafting agreements: Whether it’s a prenuptial agreement, postnuptial agreement or a consent order, a lawyer can draft legally binding documents that clearly outline the division of assets.
5. 5. Protecting your interests: A lawyer can help implement strategies to protect your business and personal assets, ensuring that your financial future is safeguarded.
6. 6. Court representation: If an amicable settlement cannot be reached, a lawyer can represent you in court, presenting your case effectively to achieve a fair outcome.

Want to protect your business assets during a divorce? Get in touch with our Family Law team

Facing the prospect of divorce can be very daunting, especially if you are worried about the future of your business and protecting its assets. The highly experienced Family Law team at Wilson Nesbitt is here to help you negotiate this process and protect your interests.

We are respected for our legal expertise, client care and high-quality service, while also being practical and efficient in our approach.

To find out more about how we can help you with your divorce and protecting your assets, please get in touch with us by calling 0800 840 1363 or e-mail us at matrimonial@wilson-nesbitt.com.

FAQs

Are business assets included in divorce?

Yes, the Court will usually treat business assets like any other financial asset, meaning that they will be considered to be part of the marital estate during court proceedings.

Is my partner entitled to half my business?

Whilst your business assets will be considered to be marital assets during divorce proceedings, the degree to which these feature in the financial settlement depends on a wide variety of factors, including the degree to which your partner has been involved in the business, the length of time you have been trading for and the nature of the business, among other things.

How is my business valued in a divorce?

When entering into the divorce process, your business will need to be valued by accountants or business valuers. The valuation will take into account several factors, including an evaluation of how much income your business is likely to generate in future and whether it can generate sufficient funds to cover the claims of your spouse can be covered without this impacting the viability of your business.

Could I lose my business during a divorce?

It is in nobody’s interest to see your business fail due to your divorce proceedings. If your spouse wasn’t substantially involved in founding or running the business, the Court will make all reasonable efforts to ensure that you retain your business in full and thus don’t lose your livelihood. However, you may have to provide your spouse with an equivalent share of alternative marital assets in a process known as ‘offsetting’.