How to Protect Your Business in a Family Law Dispute

In this video, Accredited Family Law Specialist, Bruce Provan, discusses the critical topic of protecting business assets during separation and divorce. With a focus on the unique challenges faced by small business owners, Bruce explains the importance of valuing business assets, the potential risks involved, and how to safeguard these interests through binding financial agreements. Whether you are currently navigating a separation or planning for the future, Bruce offers valuable insights and practical advice to help ensure your business remains secure.

Video Transcript: 

Good morning. My name is Bruce Provan. I’m the Managing Director of Page Provan, a firm of lawyers that practises in Central Brisbane, exclusively in family and fertility law. I want to talk this morning about how to protect business assets during a separation and divorce. The answer to that is, look, it’s not easy. And small business owners have a particularly difficult time going through the process of dividing up the property between them. Because for small business owners, often their interest in the business represents a huge portion of the assets and superannuation that are available for distribution between the parties. Now, what typically happens in relation to business assets, especially where there’s a small business, is that one of the parties has been either established the business or been very involved in this business and wants to keep that business as part of the property settlement because that’s their means of earning a living. And obviously, during the time, prior to separation, they probably spent a lot of time building up and developing this business. So often a business has to be valued as part of the property settlement process. Now, it could present a particular problem where the value of the business assets represents a very large portion of the pool of property available for distribution.

Now, in that case, if there’s not sufficient other assets or superannulation for the other spouse to receive their lawful entitlement, it’s possible that a court could make an order for the business or a part of the business to be sold. A court would try to avoid doing that, though, because to require the business or a part of the business to be sold, Court often means that one of the parties may lose their livelihood from that business. So as much as possible, the court strives to achieve a situation where that person can take out their interest in the business as part of the property settlement. So the best way to avoid, to protect a business interest during the process of the property settlement is to enter a binding financial agreement, either prior to or the relationship. Because in a binding financial agreement, the parties can specify that the business interests are to be retained by one person as part of the property settlement. Now, the binding financial agreement can either specify how all of the assets and superannuation and liabilities of the parties are to be divided in the event of a separation, or it may simply say that the business interests are to be retained by one person as part of the property settlement, and then everything else can be divided either as agreed or if there is no agreement to be decided by the court.

So for a person coming into a relationship, especially if it’s a second or subsequent relationship, a binding financial agreement is certainly worth considering as being the best way to protect business interests. But of course, a binding financial agreement is only going to be effective if the other person is willing to enter into the agreement, and both sides are required to get independent advice from a lawyer before they enter into that agreement. So I’m Bruce Provan from Page Provan, Family and Fertility Lawyers.