The law is currently moving in favour of equal splits when it comes to deciding divorce settlements. In 1997, Lady Caroline Conran, wife of restaurateur and retailer Sir Terence Conran, was awarded £10.5m after their 30-year marriage (with three children) broke up, in recognition of her “outstanding contribution” to his career. That equated to around 10% of the design guru's £80m fortune at the time, and he was bleating about that. “Now he would get short shrift and Lady Conran could look forward to £40m. This is a really major change yet there has been no Act of Parliament, merely a development in case law,” says Peter Watson-Lee, an expert in family law.
Don't kid yourself, when you divorce, your business assets are up for grabs as much as your home, car and holiday cottage. You might expect this, if you have both played an equal part in the business, but the principle is the same if your spouse stayed at home. There is now hardly any distinction between the breadwinner and homemaker, both are considered to have made an equal contribution to family wealth. You built a thriving multi-million pound business, while your partner took on the role of the homemaker, result: a 50:50 split.
“The length of marriage will determine the scale of the settlement. The longer the marriage, the more equal the split, particularly if there are children. In shorter, childless marriages where the wife has played little part in the business, you may hang onto much more,” Watson-Lee says.
You also have a better chance of hanging onto assets accumulated before wedlock. Entrepreneurs used to defend themselves by saying if they took the assets out of their business, it could go bust. “Now courts say that's a matter for you – your wife should get half even if you have to sell the business. The fact that you might be killing the goose that lays the golden egg is no argument anymore,” adds Watson-Lee.
In most cases, entrepreneurs should be able to refinance and keep their business afloat, although in difficult economic conditions it could prove tougher to get that bank loan.
Spouse rights will vanish if you declare bankruptcy – the ultimate deterrent. “All assets would go to the trustee in bankruptcy, who would sell them to pay your debts. Your spouse won't get anything, but neither will you,” Watson-Lee says.