Following our review of succession planning for family businesses, (click here for previous article relating to Protecting Business Partners) I felt that it is also important to look at other unexpected issues that may affect a family business.

For many people who run a family business, their focus is to secure the business by running it in a commercially and tax efficient manner. Sometimes, running a business in the most tax or commercial efficient way results in decisions being made that can impact the future of the business. It may be that shares are passed to a spouse or businesses are restructured for tax purposes. This could potentially lead to the loss of ownership of a long-held family business in the event of a divorce. Whilst no one enters into marriage (or co-habitation) with the intention of divorcing or separating in the future, it is an unfortunate reality that these things do happen.

In all cases I would recommend that, where one of the parties to a marriage (or co-habitation) is a major shareholder or partner in an existing family business, the individual considers the possibility of entering into a pre-nuptial agreement. This could protect and ring-fence the assets of the family business which were acquired before marriage.

Similar provisions apply to any business re-organisation.  In such a re-organisation, you should consider not only the tax implications but also the family law issues which could arise as a result of the consequence of that re-organisation in the event of a divorce.

In these circumstances, I work closely with our Family Law Team [add link to family pages] to ensure that clients can get specialist family advice, which can have a major impact on their business and commercial concerns.

If you have any concerns or would like to discuss a matter relating the the above article, please get in touch with us.

Katrina Ashbolt

Katrina Ashbolt
Email Katrina
Staff profile

Fiona Campbell

Fiona Campbell
Email Fiona
Staff profile

Morag S. MacIntosh

Morag MacIntosh
Email Morag S.
Staff profile

Jenna Thomson

Jenna Thomson
Email Jenna
Staff profile

July 31, 2015