COMMENT
Karen Anker of Barr Ellison Law discusses the importance of protecting business assets within the family sphere FAMILY MATTERS
he imposition of inheritance tax on qualifying business assets following the 2024 Autumn
date, then a prenuptial agreement should be entered into sufficiently ahead of the wedding date to avoid any allegations of undue pressure. If the adult child receiving shares is employed within the company or makes a payment to acquire the shareholding, then the shares are far less likely to be identified as non-matrimonial. While a pre or postnuptial agreement would still be advisable, this might serve only to depress or limit the other spouse’s claim against the shares, rather than removing it entirely. A nuptial agreement is not legally binding on a court in subsequent divorce proceedings, but if it has been executed with the benefit of a full understanding of the financial position, as well as independent legal advice, it’s likely that the court will give weight to its terms. Case law seems to show that, where a nuptial agreement is in place, even where the court is not fully persuaded to follow all of its provisions, it still allocates less to the claimant spouse than would otherwise be the case. Concerns only arise where the recipient of the shares is married or is considering marriage. Where a couple are cohabiting, despite the urban myth of common-law spouse entitlement, no right to the other party’s assets arises. If a non-married couple have children together, there are additional claims that the primary carer of the child can bring, but these very rarely stretch to business assets, unless based in property.
Budget, which was covered in issue 1 of Business Edition , may well encourage business owners to pass on part or all of their business assets earlier than they would previously have intended. This in turn raises issues in the family sphere. If business owners are passing shares in a limited company to their adult children who are married or might marry in the future, it’s worth thinking about how to protect those assets in the event of the marriage breaking down. Even where shares are gifted in this way, meaning that they’re a non- matrimonial asset, whose source is from outside the marriage, simply being non- matrimonial doesn’t protect such assets from the spouse’s claims or the reach of the court if there are insufficient funds in the matrimonial pot to provide for the needs of the other party in a divorce. To place yourself in the best position to prevent a non-family member from acquiring an interest in a family business’s shareholding when the gift of shares is made to a child who is already married, consideration should be given to a postnuptial agreement. This is drawn up by the recipient of the gift and their spouse, in which they can set out how they agree the shareholding should be treated in the event of a divorce. If the gift of shares has been made at the point where the adult child is single, and marriage comes about at a later
Karen Anker
is a senior associate and specialist family solicitor at Barr Ellison Law. barrellison.co.uk
“Simply being non-matrimonial doesn’t protect such business assets from the spouse’s claims or the reach of the court”
ISSUE 2 | BUSINESS EDITION | 17
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