They say that an ounce of prevention is worth a pound of cure…… And a recent case has illustrated this in no uncertain terms!! We have put together a business protection package designed, as far as possible, to protect family property, especially businesses, from the destructive effects of divorce. I wonder how much these parties would have saved if they had done it?
Briefly, the husband and wife were involved in a group of dental practices in London and the surrounding areas, which were worth, naturally enough, many millions of pounds. The husband and wife sadly divorced and, as part of the settlement, the wife received over half of these practices. The husband’s mother has claimed, on appeal, that her ownership of these businesses was not properly considered by the court and she wants them back: the result of that appeal is awaited.
From the brief information I have presently available, I have to wonder what paperwork exists dealing with this complex series of business acquisitions and transfers? Who put how much in and on what terms? When did they expect investments back? The fact that the court is being asked to decide who owns what leads me to assume that there is not much real documentation in evidence.
Where are the partnership/shareholders agreements? If these had been drawn up effectively, they could have set out the terms governing the partners/shareholders shares in property and profits. Where is the cross-option agreement, designed to protect the other partners/shareholders by giving them the option to buy interest/shares on death or divorce? Where are the pre-nuptial agreements if any of the assets were owned pre-marriage?
The sad fact is that your son’s or daughter’s divorce, or your brother’s or sister’s divorce, could seriously impact on your company and its ability to trade on safely. It is important that the measures mentioned above are put in place as early as possible to ensure that, when the unthinkable happens, you have time to react, restructure and refinance.
I’d be lying if I said I thought the costs of our dentist’s family would be less than half a million. It could be double that, although I hope not for their sake.
A thousand pounds of prevention now might save a million of cure in the future. Scary!!
Faye Remnant is part of our Family Law team based in Loughborough; our Solicitors in Loughborough are experts in their fields and dedicated to quality client care. If you would like to find out more about our solicitors in Loughborough please contact us.Talk to our legal team
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