Avoiding future family business conflicts
The business decisions we take with the best of intentions sometimes have unexpected consequences. That does not mean that we should not have made those decisions, but it does mean that, in hindsight, we may have chosen to do things differently.
For many people who run family businesses, their main focus is to secure the success of the business for the next generation by ensuring that the business is run in a commercially and tax efficient manner. It is an unfortunate truth that steps taken to improve the tax or commercial efficiency of a business, such as passing shares to a spouse, or reorganising the business, can lead to the loss of ownership of a long held family business in the event of a divorce.
No one enters into a marriage or co-habitation with the intention of divorcing or separating in the future, but such things do happen. Where one of the parties to a marriage or co-habitation is a major shareholder, or a partner, in an existing family business, that individual may wish to consider the possibility of entering into a pre-nuptial agreement to protect the assets of the family business which were acquired before marriage. The same rationale applies to those commencing cohabitation. Equally, an individual who is considering undertaking a business reorganisation may wish to consider not only the tax implications of the reorganisation, but also the family law issues which could arise as a consequence of that reorganisation in the event of a divorce.
If you require any advice in relation to these issues, please do not hesitate to contact Jacqueline Stroud who is an Accredited Family Law Specialist. MacRoberts can also give detailed tax and inheritance planning advice.