The division of the property pool
When separating from your partner, a division of the property pool must be determined before you formalise a property settlement. A property settlement involves all assets and liabilities that are combined into a property pool. The property pool will include assets and liabilities that are both jointly and separately owned.
A business can be treated as being an asset and thus be included in the property pool. How the business operates and the financial records of the business will be closely examined. You must disclose your financial position and provide all of the required documents for such examination. The exchange of financial disclosure will be a requirement of both you and your partner.
The future of the business
If one party is the business owner or is wishing to retain the joint business, the business's value will need to be calculated. It is recommended that an independent Accountant or Valuer value the business to ascertain an accurate value of the property pool. The party wishing to retain the business can ‘buy out’ the other party or a property adjustment can be made from other assets in the property pool. Your agreement reached with the other party will be drafted into the Consent Orders or the Binding Financial Agreement.
If neither you nor your partner wishes to retain the business, it will need to be sold. The proceeds of the sale will be divided in a fair and equitable manner.
Things to consider
It is important to determine whether the business needs to continue operating while the separation or divorce is being finalised. As separation or divorce can be an extremely emotional time, it can have a significant effect on business.
The financial aspects of separation can be complex and overwhelming to process. It is therefore recommended that you seek legal advice from a family law expert.
If you and your partner have decided to separate or are considering separation, we welcome you to contact Grace Family + Collaborative Law for a consultation to discuss all of your family law needs – 1300 414 855.