A Legacy Intact: safeguarding your family business in the event of divorce - Book - Page 86
For example, if dividends were to
review would be prudent to seek
be declared on an ad hoc basis as
to ensure that overall the family
or
and when individuals need funds, it
business remains as little affected
grandchildren of a family-owned
would be open for their spouse to
as possible.
business marry, they will be entering
argue that it was always the case
the marriage with a valuable, family-
that their spouse had easy access
As
If
and
when
any
children
for
the
ownership
of
the
generated asset which may have
Care should therefore be taken
to cash and that this should be
underlying shares themselves, there
been gifted to them prior to the
as to quantum and frequency of
considered when making a financial
can be very good tax reasons for
marriage or which they may be due
distributions to the next generation
award in their favour. It would seem
wanting to pass shares to a spouse
to receive during the marriage. In
and how they are documented. The
prudent (purely from a matrimonial
(e.g. such transfers are exempt from
order to protect these interests for
same can be said for loans from
perspective)
and
inheritance tax). However, if the key
future generations, the family office
the business to a shareholder. This
corporate
structure.
focus is preserving the shareholding
and/or directors (in conjunction
can of course be challenging in
I.e. a board compact or family
for future family members, shares
with
situations where the shareholder’s
charter to be established to set out
in the company should not be
adopt and maintain a strategy
sole
the
the clear strategy and aims for the
transferred to new spouses. Family
which consistently emphasises the
business. Protocols and policies
preservation of capital held within
businesses
‘dynastic’ nature of this asset. The
relating
to
dividends
and/or
the family business and a strict and
balance
family office and/or directors need
capital
events
should
consider
consistent dividend policy could be
against the potential tax benefits
to be aware that if distributions from
the matrimonial position and the
agreed and recorded.
of involving spouses. This is often
the company are used to fund the
attitude of the English Family Court.
the
shareholders)
should
source
of
wealth
is
for
a
family
governance
therefore
matrimonial
need
to
protection
where trusts play a role so that
shareholder and their spouse’s day-
Care should be taken in how and
spouses might only have a right to
to-day living expenses, this will raise
when distributions are made to
income. The next generation are of
the presumption in the eyes of the
the next generation. Although the
course likely to wish to pursue their
English Family Court that the asset is
Family Court would always be
own ventures and one assumes
a resource and that the distribution
reluctant to order a sale of shares in
that they will be encouraged to
could or should continue.
a family-owned business, ultimately
support themselves from income
it has the power to do so and so
they generate independently from
consideration of these issues as
employment or other endeavours.
part of a corporate governance
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