If you are a business owner and you go through a divorce, your business assets may be taken into account when assets are being divided, however this will depend on the specific circumstances. Some of the factors that will influence whether (and how much) your wife is entitled to are:
Level of involvement
One of the main considerations that the courts will take into account, is how much involvement your wife has had in the business. For example, if she has been named as director or a shareholder, this will infer that she has had a very active part in running the business, even if they were only added for tax reasons.
‘Relationship-generated disadvantage’
Another factor that will influence the judge’s decision is whether your wife has suffered a ‘relationship-generated disadvantage’, such as giving up their own career to look after your children or taking on a lot more of the domestic duties, so that you could concentrate on running the business.
Are there any business partners?
If you have a business partner or multiple business partners from outside your family, then this can reduce the chances that your wife will be deemed to be entitled to some of the business. Judges will usually determine that business partners should not be negatively affected by your divorce in any way. The exception would be if your wife had a large involvement in the business. Generally speaking, a business partner divorce should not be detrimental to the other business partners.
When the business was set up
A judge will also look at when the business was set up, in relation to the marriage timeline. If the business had been running for many years before the marriage and then the marriage only lasted a few years, then there is less likelihood that your wife would be entitled to some of the business. If the business started after you were married and your wife supported you throughout the process of setting the business up, it is more likely that she would be entitled to some of your business.
How successful the business is
If the business is generating a large amount of profit and is worth a lot of money, then the court will want to ensure there is a fair outcome for your wife. However, if the business is not particularly profitable and has a low value, there would be no financial benefit to your wife by dividing shares in the business.
How would the business be affected?
If a judge decides that your wife is entitled to some of the business but they are not actively involved in the running of your business, an arrangement could be made where instead of taking a percentage of shares, your wife receives a higher percentage of other assets. This would allow you to continue running the business without it being affected by the divorce settlement.
In the circumstances where a wife is a director, the situation is more complicated and there could be a number of different ways of dividing the business. Again, one arrangement could be that the wife receives a higher percentage of other assets to offset the amount that she is entitled to of the business.
In rare situations, the court could order that the business is sold and the profits from the sale are divided but this would usually be a last resort when the couple fail to come to any other agreement.
Like most aspects of a divorce settlement, trying to agree on arrangements before the necessity of going to court will help to keep costs down.