Protecting Your Business in a Separation
Debbie Bryan-Lamb • March 1, 2019
Even when a business is established prior to a
relationship, businesses can still be subject to a spousal claim under the
Property (Relationships) Act 1976. If
after three or more years spouses/partners decide to separate “relationship
property” can include the family home, income and/or property acquired during
the relationship – divided equally with limited exceptions. In contrast “separate property” can include
property acquired prior to the relationship, gifts and inheritances (which are
not generally divided) but may be the subject of compensatory awards.
A business (whether established during or prior a relationship) may be vulnerable to spousal claims with key questions to be asked including:
- Has the business been intermingled with relationship property or has relationship property been used to support the business?
- Was the business established for the common benefit of the spouses or used to benefit the family during the relationship?
- Has the non-owner spouse made financial or non-financial contributions to the business?
Useful tips to help you achieve greater protection for your business include:
- Entering into a comprehensive and fair Contracting Out Agreement with your spouse/partner either before or during your relationship confirming how property will be divided on separation or death, which specifies that your business will remain separate property and will not be divided.
- Ensure your business property and relationship property are kept separate. If you own a business prior to a relationship which then becomes mixed with relationship property, it could subsequently be considered relationship property. Paying yourself a competitive wage could prevent a successful argument that you contributed a portion of your income (ie relationship property) to the business.
- If your spouse/partner works in the business ensure you pay him/her a competitive wage thereby avoiding a successful claim that he/she made financial or non-financial contributions to the business which could allow them to later claim a relationship property interest in the business.
- If you have business partner a Shareholder’s Agreement will increase certainty over what will happen to one of the owners in the situation of a relationship breakdown. Such an Agreement would specify each owner is to have a satisfactory contracting out agreement with their spouse/partner.
Separation can be an emotional and financially challenging experience with so much to think about - even more-so for business owners with other stakeholders to consider. Whether you are “in between” relationships, in the early stages of a relationship, or contemplating separation, obtaining sound legal advice, with the right preparation, will help you work through the process more quickly thereby obtaining a settlement which allows your business to continue to prosper.
The partners are delighted to announce that Jonathon Amtmann has been promoted to Associate of the firm.
The Fencing Act 1978 (“the Act”) deals with boundary fences between neighbours. Read on to find out all you need to know when erecting a boundary fence.
With the use of social media and online platforms becoming more and more prevalent in our daily lives, it is also becoming easier for people to use these platforms as a way to inflict psychological and verbal abuse or harm on other people. Individuals are now able to use online platforms to create fake profiles, post, threaten, and stalk people as a form of psychological harm. It is even becoming increasingly common for people to send messages by entering text into the reference box in a bank transfer. Individuals are becoming more creative, so it is important that we are aware of the risks of harm, and take the necessary steps to avoid such behaviour from continuing. Under the Family Violence Act 2018, such online behaviour may constitute “family violence” and an application to the Family Court for a Protection Order may be necessary. In order to make an application under this Act, you and the person exerting this harmful behaviour (the Respondent) must have been in a “family relationship”. The Respondent may be a current or previous spouse or partner, or a family member. You may wish to seek special conditions to be included in the Protection Order should the Court grant one. This may include that the Respondent must take all reasonable steps to remove harmful material about you from social media. If you are not in a “family relationship”, an application can be made in the District Court under the Harmful Digital Communications Act 2015. In contrast to an application under the Family Violence Act 2018, for an order to be granted under this Act, it must be satisfied that the other party had intention to cause you harm, and such communication would cause harm to a reasonable person and did cause you harm. If successful, the Court may make orders against the other party including taking down or disabling the material, ceasing or refraining from the conduct concerned, or publishing an apology. This Act is narrow and more targeted, and is not likely to result in quick or efficient redress compared to the Family Violence Act 2018. In any event, it is important that you put necessary measures in place to stop this behaviour from continuing including not sharing your passwords, disabling GPS tracking on online platforms, blocking others on social media, and making a complaint to the relevant agencies.
Looking to buy your first home but having to rely on Mum and Dad to cough up some money? How would that work and what risks do you need to be aware of?
Four important legal documents essential in most people’s lives include having a:
• Will;
• Enduring Powers of Attorney (Property and Personal Care and Welfare);
• Family Trust; and
• Relationship Property Agreement.
Question
– do you want to have peace of mind about what will happen to your property if
you die or separate from your partner?
If you answered “yes” then yes you definitely need a pre-nup agreement.
If you are already living together as a couple or you are planning on moving in together, you need to get sound advice from an experienced lawyer specializing in relationship property matters. Right from the outset you need to understand the implications “living together” may have for your separate property rights.
The Wills Act 2007 sets out specific requirements Will documents must follow in order to be valid.
When a partner or spouse acquires property from a
third party by way of survivorship (or death), that property will be separate
property.
As a general rule, gifts between partners or spouses (known as “interspousal gifts”) are not classified as relationship property - unless such gifts are used for the benefit of both parties or that is the intention.
