COVID-19 - FAQ BUSINESS ASSETS ON DIVORCE
11 MAY 2020
For those actively involved in running a business, the additional stress and anxiety of resolving financial issues on divorce can often affect the performance of the business.
The global public health emergency has meant that some businesses are not able to operate, some businesses are adapting but are seeing a downturn in work, whilst others are in high demand.
Here are some answers to Frequently Asked Questions answered by our specialist Family Lawyer Barbara Richardson:
Q: Do we have to get a Business Valuation?
A: When spouses or civil partners separate, any business owned by one or both spouses is a financial resource. The Court takes into account when decided the outcome of the financial claim or if the Court is asked to approve an agreed Financial Order.
In the current financial climate, a valuation may not be needed if, for example, it is appropriate to share the business between the couple so they each take the same risk. Also, where the main value of the business is as an income stream, a valuation may not be necessary.
Businesses come in all shapes and sizes and valuations, carried out by accountants, come at a price. Where there is a doubt about whether it would be cost effective to obtain a valuation then often accountants are willing to give you an initial view about whether a valuation would be worthwhile. Please bear in mind that the preferred route may be to instruct one expert at joint cost and if you consult someone you would want to act as a joint expert to give an initial view this would then prevent them from preparing a joint report.
Q: Can we rely on a Valuation Report prepared pre COVID-19?
A: These valuations are usually very date sensitive. In the current extraordinary economic situation, there are few businesses that have not been affected. Only if the business is continuing as usual should the report remain reliable. Ultimately, the best person to ask is the author of the report.
The other alternative, where the report has been done on a joint basis, is to ask another accountant (often referred to as a ‘Shadow’ accountant) to look at the report on your behalf and give you separate independent advice.
Q: A Financial Order has been made and the business circumstances have changed drastically – what can I do?
A: If a financial order has been made based on a business valuation and this unprecedented COVID-19 lockdown means that one former spouse/civil partner is significantly disadvantaged, then it may be possible to ask the Court to change the terms of the order.
This is not a straightforward situation and we strongly recommend that you seek advice from our experienced Family Lawyers before taking any action.
Our experienced Family Lawyers, Barbara Richardson and Nicola Codd are available to help. We are working from home in accordance with the government guidance but are contactable on our office telephone number, by email and by Skype for face to face meetings.