Safeguards for growing family businesses
21st March, 2017
For fast-growing companies which are also family businesses, the focus is not only to build a successful and profitable business but also, to protect it for future generations.
There are a number of ways this can be achieved from a family law point of view.
One of these is a Pre-Nuptial Agreement. This is a legal agreement made between two individuals before their marriage has taken place. The agreement usually sets out how the couple wish their assets to be divided between them if they later separate or divorce.
Individuals who are planning to become civil partners can also enter into a legal agreement before the registration of their civil partnership.
A Post-Nuptial Agreement is a legal agreement made between individuals who are already married. The agreement usually sets out how the couple wish their assets to be divided between them if they later separate or divorce. Civil partners can also enter into a Post-Nuptial Agreement.
Essentially, the objectives of Pre-Nuptial and Post-Nuptial Agreements are the same. They provide clarity and transparency by setting out how the parties will conduct their financial affairs during the marriage.
They provide certainty for couples who wish to formally agree how their assets should be divided if they later separate or divorce.
They can provide for inherited wealth or pre-marital property to be retained by one party but most importantly, they provide protection to those seeking to protect assets such as family businesses from a later financial claim.
Individual circumstances can be tailored to suit each party and can limit scope for uncertainty and emotionally draining and financially costly court proceedings in the event of a future breakdown of the marriage.
When considering a Nuptial Agreement, it is very important to obtain legal advice from an experienced solicitor. Whilst Nuptial Agreements are currently not binding, when considering an application for a financial remedy, the court, within divorce proceedings, must give appropriate weight to a Nuptial Agreement.
If done properly, with financial disclosure and legal advice on both sides, the court can and has decided that a Nuptial Agreement should be given decisive weight.
A Cohabitation Agreement is a legal agreement which sets out arrangements between two or more people who have decided to live together, for example, partners in a relationship who have decided to live together but not marry.
Not only can a Cohabitation Agreement provide certainty and clarity but it can be used to protect family wealth and can provide reassurance to those with a family business that their business interests are protected should their relationship break down.
The Family Team at Ward Hadaway are used to advising business clients on issues arising from the breakdown of a marriage or relationship in order that their business interests and assets can be protected. We work with our Private Client and Company/Commercial Departments to provide appropriate all-round advice to them and their families.
* For more information on the issues raised by this article, please contact Andrea Dyer. This article first appeared in the Ward Hadaway Yorkshire Fastest 50 Awards 2017 supplement.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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