A formula to protect businesses and assets for the future
I was delighted to be invited to contribute an article for the Farmer’s Guardian on divorce in farming communities and how to protect assets for future generations.
Constant pressures and wider uncertainties in farming communities have been further exacerbated by the Covid-19 pandemic – with dairy farmers hit particularly hard by falling demand.
The knock-on effects of recent unprecedented developments unfortunately extend to business owners across wide ranging sectors including hospitality and tourism.
The cumulative impact will no doubt leave business owners with even less time or energy for planning ahead with survival being the overriding priority.
However, effective succession planning – irrespective of which industry you are in – is vital to ensure business continuity.
When undergoing separation and divorce, lack of knowledgeable legal advice can irreparably damage future financial planning. We have recently stressed the importance of choosing the right family lawyer in these situations.
I encourage business owners who are about to get married to make time to set up a pre-nup which will outline how the company will be treated and dealt with in case the marriage ends in divorce.
The agreement will help protect against the business when the court considers how the finances of the parties should be shared.
In farming communities Courts treat divorces differently because they need to resolve how ex husbands and wives and their children can be provided for – avoiding, if possible, the excessive sale of land and thereforeto prevent a financial crisis and long-term suffering.
Although not legally binding in England and Wales, pre-nups are nowwidely accepted as the sensible way to avoid the potential distress, acrimony and expense associated with resolving financial matters across all key areas, should a marriage break up.
Both parties should be open and honest about their financial situation before signing the agreement. Situations where the contracts can run into problems include when judges think they have been signed in haste and under pressure.
A judge will want to know that the financially weaker partner understood the agreement, was not under duress when they signed it, and took independent legal advice. Courts may ignore or vary pre-nups drawn up in haste.
It is important that the agreement is signed at least 21 days before the wedding, making full financial disclosure and securing sound legal advice.
There are of course situations when parties do not marry. In those circumstances we recommend a cohabitation agreement which would reflect and dictate how the parties’ assets should be treated if the relationship breaks down.
It is always worthwhile before committing to a relationship to fully consider the financial situation and take specialist advice on the consequences of a future breakdown and how to avoid them.
Jones Myers has extensive expertise in working with business owners across wide ranging sectors and in pre-nup and post-nup agreements. Call us at Leeds on 0113 246 0055, at Harrogate on 01423 276104, or at York on 01904 202550. Visit www.jonesmyers.co.uk, email firstname.lastname@example.org or tweet us @helpwithdivorce