Tuesday, 14 January 2014
Hands off the company assets
Directors have been reassured their company assets should not be at risk if they face divorce proceedings.
Nadia Davis, our family law expert said with one in three marriages ending in divorce, it was vital that everyone involved knew where they stood.
“In any divorce case, the assets of the marriage have to be clearly established and then divided fairly between the couple involved. But if either person is a director of a company, it’s important that you know just how far you can go in protecting your company’s assets.”
Nadia said the courts would identify the assets of a marriage as any money and property (including houses, cars and possessions) owned jointly by the couple or separately by one of them.
“If you can’t agree on how to divide these assets, the courts will ask each individual to set out their current financial circumstances and any potential future needs. This means each person will need to give details of their salary, shares, investments, debts and their housing needs. And if there are children involved, their needs will always come first. So if you’re the main or sole carer of the children, in the vast majority of cases you’ll get a larger portion of the assets to cover their needs.”
Nadia said once the children were provided for, or if there were no children involved, the court would take into consideration each side’s finances and share the assets out as appropriate.
“Obviously anything you own either personally or jointly would be included and divided, but what about the assets of any company you may run? The good news is that your company’s assets, such as property, cars or money in the bank are safe – the company has separate legal status meaning it owns these assets directly and so they can’t be included in any negotiations.”
But Nadia warned that a director’s salary, shares and pension would all be closely assessed, and if the company looked likely to be successful in the future, that income could be factored into the settlement.
“And if a director’s spouse has enjoyed a certain standard of lifestyle through the company, such as private health care or a company car, the courts will try to ensure they don’t lose out too.”