How business interests are dealt with during a divorce 

In Scotland, business interests can be considered part of the overall marital property when a couple goes through a divorce. The division of assets, including business interests, is governed by the principles of fairness and equality under Scots family law.

Matrimonial property

Determining whether a business qualifies as matrimonial property is one of the initial steps. Matrimonial property includes assets acquired by one or both parties during the marriage until the date of separation, with the exception of assets that are inherited or gifted to one of the parties. A Limited Company is a separate legal entity and is not usually regarded as matrimonial property however, if either spouse owns shares in the Limited Company these, if acquired during the marriage, would normally form matrimonial property.

When it comes to business interests, several factors are taken into account to determine how they are dealt with during a divorce:

Valuation: Once a business, or any portion of it, is deemed matrimonial property, it must be valued at the separation date. This typically involves expert professional appraisers or accountants to assess the business’s assets, liabilities, and overall worth.

Contribution: The court considers each spouse’s contribution to the business during the marriage. This includes financial contributions, such as investing capital or providing loans, as well as non-financial contributions, such as managing the business or providing support to the spouse who runs it.

Source of funds: If one spouse owned the business before the marriage or received it as an inheritance or gift during the marriage, the court may consider it separate property. However, if marital funds were used to improve or expand the business during the marriage, the other spouse may still have a claim to a portion of its value.

Future prospects: The court may also consider the future earning potential of the business and any anticipated changes in its value. This could include factors such as market trends, industry conditions, and the business’s growth prospects.

Other assets: The division of business interests is part of the overall financial settlement in divorce proceedings. The court will take into account all marital assets and liabilities when determining a fair and equitable division, which may include other property, savings, pensions, and debts.

Settlement options: In some cases, the spouses may agree to a settlement that involves one person retaining ownership of the business while compensating the other with other assets or a lump-sum payment. Alternatively, the business may be sold, and the proceeds divided between the spouses.

Ultimately, the court aims to achieve a fair and equitable division of marital assets, taking into account the specific circumstances of each case. This may involve considering factors such as the length of the marriage, the standard of living enjoyed by the spouses, and the needs of any children or dependents. In complex cases involving business interests, it is advisable for both spouses to seek legal advice from experienced family law solicitors to ensure their rights and interests are protected.