Owning a business together but separating? What you should know.

A 'clean break' 

In Scotland, divorce and the dissolution of civil partnership legislation encourage a 'clean break' between couples on divorce or when partnerships are dissolved. This means there will be no ongoing financial ties between a couple, such as the payment of spousal support, the continued operation of a joint bank account or retaining a jointly held property. The aim is that a fair financial settlement will provide the springboard for personal and financial independence for each party.

Many couples are on board with this notion, and recognise the benefits of securing that independence as well as looking forward to the day they will no longer have to speak to 'the ex' ever again.

A continuing business relationship

But occasionally, couples have complex business lives and have for many years been in family partnerships or have owned and managed companies which they have operated very successfully together. Whilst their personal relationship may have altered, they remain committed to their joint business venture. Seeking specialist family law advice in these circumstances is crucial.

Solicitors will often advise against a continuing business relationship given the potential pitfalls – what happens if the business relationship sours? Will the couple be able to put the best interests of the business above their own? Will things change if one party enters a new relationship? What happens if they are at loggerheads over a business decision?

Despite the challenges, many couples are able to retain a positive working relationship and with the right family law advice - bolstered too by insights from commercial and employment lawyers - such businesses can flourish. Together, the lawyers can prepare written, inter-linked agreements which can spell out the terms of the parties' employment or business relationship and what will happen in the event of a business break up.

Consideration should also be given to seeking tax advice, as the usual tax exemptions which apply between spouses will be lost before or on the granting of divorce. The involvement of independent financial advisors and accountants can also be helpful. It is important to be supported by a team of professionals who will work to ensure the best outcome for the couple and their business.

Work together, not against

Mediation or Collaboration may be worthwhile considering for couples who envisage continuing their business relationship after their romantic one has ended. These forms of alternative dispute resolution encourage parties to work together to resolve the financial and other issues arising from their separation and to focus on fixing the problem, rather than apportioning blame. Treating each other with respect and kindness will give separating couples the best chance of success in any continuing relationship – be that as business partners, parents or just simply friends.