I know there’s no hard and fast rules but I wanted to get people’s opinions on my scenario. I don’t want people to judge, but I’m not asking the following due to money grabbing, it’s more about how I stand if my wife separates/divorces me and more importantly how we all move on and everyone gets the best out of this if it happens. So my position at the moment is that I'm expecting to separate and divorce.A lot of this focuses on a business, which makes things a bit more complicated than a simple – kids, house/assets type split.So we have a house, 2 kids, house has about 500K equity in it, so a fair amount.Married in 2013. I set up in business in 2003 as a sole trader, incorporated in 2012. To begin with the business made a little bit of money while I also worked (maybe £10K to £20K a year).
In 2011 I quit my job to work on the business full-time and things started to take off (I actually lived with my wife from 2008 or so before we were married). From a business that earned 40K a year at the time, it’s now turning over 500K+ a year. Profit is about 200K a year (albeit could be higher, around £350K if we both didn’t take big salaries/pension). I’m 100% shareholder. I didn’t split the shares with my wife, as I started it before we were married. She does however work for the company as an employee - takes a decent salary and max pension.We did have 3 employees, but now just 1. The business works with just me, but in reality it needs people so money could be spent from the turnover on extra labourSo, the business has grown well since we were married, but I set it up 10 years earlier.From my perspective, if we split I’d prefer that the business continues (under myself only as I want a clean split), it grows and does well, and that my wife and kids stay in the family home and not move away due to financial pressures and inability to afford the house (£250K mortgage). I’d probably be prepared to give up the family home (500K, plus assets) in return for keeping the business (I’ve also actually paid the whole mortgage for the last 7 years and put down over 100K deposit on the house). I think at the net profit the business is generating that a court would probably accept that split, but I wanted to work out if that’s fair.
If I give up the house I'd want to be assured that my kids are going to stay there and not move away due to my ex-wife not being able to afford to keep the house. If they move then that means I can't have my kids 50%.The business has had approaches in the region of 3 million in the past, but nothing formal. My wife would probably say that it’s worth millions, but on paper it would probably be valued at a traditional 3 times net profit as filed with Companies House, so 600K or so. She would probably also argue that she plays a bigger part in the business than she does (emotional support, generating ideas, being a Mum while I worked etc). In reality the business wouldn’t survive without myself working 15 hours a day and the background and knowledge I have in the business. It’s a volatile business, so if I’m not involved in it it makes very little very quickly. My wife has taken a salary every month since we were married, so hasn't taken time off, forgone a career for herself whilst I worked etcI know courts don’t tend to split shareholdings, but my concern is that if things do go down the legal route that I could end up having to justify the value of the business (and look like i'm down playing the value) and end up basically working in the future in order to supply my ex-wife with a benefit from the business that she’s no longer involved in. I’d rather bite the bullet and give away the house, so my kids stay local and my wife stays happy with that.I don‘t want to go down the route of lawyers and courts, but I want a
fair settlement that allows us all to leave feeling like no one has been outdone. I know that on my own I can generate a lot more value in the business, but I don't want my ex-wife to feel like she was outdone when the business excels in the future due to my own hard work.
I feel that at the moment if I offered the house that my wife would think I was walking away with millions in return, when in reality I’d walk away with no assets, but a job, that I could earn from, and under my own control. I guess you could say I'm an entrepreneur and that I've done well from my own hard work and innovation. But, as with all businesses, that's quite fragile, and dependent on that person pushing it forward.
I don’t want to get into a scenario whereby I formally owe my wife some sort of share of profits going forward to support the lifestyle she had while married (although I could probably accept this short term). I do however want to make the business even more successful so that if I can I can help my kids with the lives they were used to, even if in the future that meant that I foot a lot of the bill for that if I do grow the business.Just putting the feelers out there for some opinion and maybe anyone else who has gone through a similar scenario whereby a business has been involved in a split. I know most people would be joint shareholders, which makes things a bit more clear, but in my case we’re not.
Like my username - moremoneymoreproblems - I sort of wish I just had a bit of equity and a CD collection to split! That would make things easier.