Can I Sell My Business Before Divorce?

As with most things during the divorce process, it’s important to consider your actions carefully, as there could be serious consequences if you are found to be trying to hide assets from your partner. This is why it is essential to obtain specialist legal advice at your earliest opportunity, so you can be confident there will be no unwanted surprises when proceedings get underway.

Selling a Business: How Does it Work?

Whether you can sell a business largely depends on the ownership structure. Limited company directors are free to dispose of the company whenever they like, provided their spouse has no involvement in its operations. 

Sole traders cannot sell their business, since both owner and firm are legally the same entity. Unlike a limited company, the business does not have its own assets as these would belong to the owner. If you are a sole trader and wish to stop, you can do this at any time and sell any assets involved in running your firm.

No matter if you’re a sole trader or limited company director, you’ll need to report any income from the sale of the business and/or its assets to HMRC.

Selling Family Businesses

Many companies in the UK are operated by families, and often spouses are involved with the running of the firm. If this is the case for you, then you will not be able to sell your business before divorce without the explicit consent of your spouse. 

Another option would be for either party to buy out the other and take full control of the business. 

While it may be possible to sell your business before divorce, it is advisable to seek specialist legal advice before doing so. Your partner may view this as an attempt to hide assets or reduce the money available to both parties. The court can also take action against you if it feels you are deliberately concealing your true wealth. 

If your partner suspects you are attempting to conceal assets, they could start divorce proceedings early and move to block the sale of your business via an injunction. Meanwhile, the court also has the power to reverse your transaction if it believes the sale was carried out to reduce your liabilities. 

As with all things regarding divorce and separation, having a specialist full-service law firm on your side is crucial. They will be able to advise you on the most suitable actions for you to take, making the entire process as smooth as possible. Not only that, but they can pool together the expertise of various departments to provide you with a holistic service which is designed to deliver your desired results.  

The Penalty for Hiding Assets in Divorce 

If you’re found to have hidden assets from your spouse, a court could decide to impose a financial penalty such as reducing your divorce settlement or forcing you to pay the other party’s costs. More severe cases could see you face imprisonment or a criminal record. 

When couples divorce, it’s a legal requirement that a “full and frank disclosure” takes place. This means both parties have to be completely honest about their assets so everything can be fairly divided in the divorce settlement. If this does not happen, it’s possible for the affected spouse to try and rectify the situation through the courts. 

The courts can even take action after a financial settlement has been agreed. Should it later come to light that one of the parties deliberately hid assets from the other, it’s possible for the case to be reopened and the settlement retrospectively amended. 

Why Work with a Specialist Business Divorce Lawyer

When going through something as stressful as a divorce, you’ll undoubtedly want to obtain comprehensive legal advice which is geared towards securing a positive resolution. If you also own a business, it makes sense for you to speak to a solicitor who knows the ins and outs of running a company.

Many specialist divorce solicitors will simply focus on the family law aspect and will not have the required expertise to satisfy your needs as a business owner. Working with a business divorce lawyer or a full service law firm with experience across multiple disciplines should therefore be your priority.

If you do decide to sell your business before divorce, a full service law firm will also be able to advise you on employment law for companies with employees and help you with private client matters such as wealth planning strategies and updating wills.  

This ensures you can take care of everything in one go and be confident you are getting the level of support you need.

As a full service law firm, Thursfields can assist you with a broad spectrum of legal matters. Our family law and mediation department offers compassionate, forward-thinking advice specifically designed to secure your ideal resolution, while we can also call upon the expertise of our specialist corporate and commercial team to handle everything involved with your business.

Not only that, but we can also deal with areas such as updating wills to reflect your new circumstances, and ensuring your responsibilities as an employer are adhered to. Everything you could possibly require can be taken care of, so you don’t need to worry. 

Our motto is that we’re built around you, and we take this seriously. We take the time to understand your exact circumstances and goals, before formulating a bespoke strategy tailor-made for you. 
For more information about how we can help, contact us today.