Author: Kelly Edwards

If you’re a business owner contemplating divorce, you’re facing one of the most complex and high-stakes situations in family law. Your business, often your most valuable asset and the culmination of years of hard work, could be significantly impacted by divorce proceedings. This comprehensive guide explains how divorce affects business owners in England and Wales, what you need to know about protecting your company, and how to navigate this challenging process whilst safeguarding both your livelihood and your financial future.

Understanding how divorce impacts business assets is crucial for directors, partners, and entrepreneurs with significant equity. In England and Wales, businesses established or grown during marriage are typically considered matrimonial assets, meaning they may be divided during divorce proceedings. Courts prefer to leave the business owner with the business whilst compensating the other spouse with a larger share of other assets or maintenance payments. However, achieving this outcome requires strategic planning, comprehensive financial disclosure, and expert legal guidance from specialist family law solicitors who understand the unique challenges business owners face during divorce.

Why Your Business Is at Risk in Divorce

divorce financial settlement

​​Many business owners mistakenly assume that because a company is registered in their name or operated as a limited liability company, it will be automatically protected during divorce. Unfortunately, this assumption is fundamentally incorrect under English and Welsh law.

Businesses as Matrimonial Assets

​​Under the Matrimonial Causes Act 1973, courts must consider all assets when determining a fair financial settlement. A business is generally treated as a matrimonial asset if it was established during the marriage or if its value increased significantly whilst you were married. This applies regardless of whether your spouse had any direct involvement in running the company.​​

The starting principle in English family law is that matrimonial assets should be divided equally between spouses, reflecting the contributions both parties made to the marriage. Courts recognise that whilst one spouse may have built the business, the other may have made equally valuable contributions by managing the household, raising children, or providing emotional and practical support that enabled the company to flourish.​​

The Reality for Different Business Structures

Your business structure influences how courts approach valuation and division, but it does not provide automatic protection. According to recent data from the Department for Business and Trade, there were 5.5 million private sector businesses in the UK in late 2024, the majority of which were small and medium-sized enterprises (SMEs). These businesses employ approximately 60% of the UK’s workforce and represent not just financial value but years of dedication, sacrifice, and personal identity.​​

Sole traders face particular vulnerability because business assets and personal assets are legally indistinguishable. The owner controls business assets but remains personally liable for business debts, meaning income and profitability become central considerations in divorce settlements.​

Partnerships present additional complexity, especially when other partners beyond the divorcing couple hold stakes. Partnership agreements may include provisions restricting share transfers, and the involvement of third parties can complicate valuations and settlement negotiations.​​

Limited companies offer some structural separation because they exist as distinct legal entities. However, this does not exempt your shareholding from being valued and included in the matrimonial asset pool. Courts will assess the value of your shares and consider them alongside other assets when determining a fair settlement.​​

Understanding Business Valuation in Divorce

Business Valuation in Divorce

Accurate business valuation forms the foundation of any fair financial settlement involving business interests. The valuation process can be complex, costly, and contentious, but understanding the key methods and principles will help you navigate this critical stage.

Common Valuation Methods

​​Financial forensic experts employ various methodologies to determine what a hypothetical buyer would pay for your business. The appropriate method depends on your business type, structure, and assets.​​

Asset-based valuation calculates a business’s total value by subtracting its liabilities from its assets. This method suits businesses with significant tangible assets such as property, equipment, or stock, rather than service-based companies. For example, property investment businesses, manufacturing companies, or farming operations typically benefit from asset-based valuations.​​

Earnings-based valuation focuses on the business’s ability to generate future income. The most common approaches include the Discounted Cash Flow (DCF) method, which estimates and discounts future cash flows to present value, and the Capitalised Earnings method, which applies a multiple to current earnings. This approach suits professional practices, consultancies, and businesses where value derives primarily from ongoing operations rather than physical assets.​​

Market-based valuation compares your business to similar companies that have recently been sold. This method works best for businesses in well-established markets with readily available comparable sales data. Valuers may employ the guideline public company method or the merger-and-acquisition method to establish market value.​​

The Role of Expert Valuers

Courts typically appoint a single joint expert (SJE), usually a forensic accountant, to conduct business valuations. This expert is instructed jointly by both parties to ensure impartiality and reduce costs. The SJE analyses financial statements, management accounts, tax documents, asset registers, and recent trading performance to produce a comprehensive valuation report.​​

Business valuations can cost between £5,000 and £25,000 or more, depending on complexity. Before commissioning a valuation, you should carefully weigh these costs against the business’s value and consider whether a formal valuation is necessary in your circumstances.

Factors Affecting Business Value

​Several factors influence how experts value your business. The nature of your business significantly impacts valuation approaches. A company that simply serves as a vehicle for your professional work, such as a consulting firm, may have little value beyond your earning potential. In contrast, a company with diversified customer contracts, established brand value, and tangible assets possesses intrinsic value independent of any individual owner.​​

Business structure and operations require careful evaluation. Experts assess whether the business’s value is closely tied to your involvement, how easily it could be sold or transferred, and what role your spouse played in its development.​​

Complex financial structures present particular challenges. Businesses with director loans, intertwined personal and business finances, or multiple shareholdings require detailed analysis to ensure accurate valuation. If you’ve been drawing unsustainable income amounts from the company, this can skew perceived value and complicate negotiations.​​

External factors such as economic conditions, industry-specific challenges, and market trends must be considered. The business’s fortunes may have changed significantly since earlier profitable periods, and valuers must account for such variations when assessing sustainable earnings.

Matrimonial vs Non-Matrimonial Assets

A critical distinction in divorce proceedings is whether business value is considered matrimonial or non-matrimonial property. Marital assets are those acquired during the marriage and are typically subject to equal division. Non-matrimonial assets, such as businesses owned before marriage, inherited interests, or gifts, may be excluded from division if sufficient other assets exist to meet both parties’ needs.​​

The landmark case of Jones v Jones established essential principles for businesses built both before and during marriage. The Court of Appeal determined that pre-marital business value should be excluded from matrimonial assets, whilst value increases during the marriage were subject to division. This ruling emphasises the importance of distinguishing between pre-marital and marital business assets and evaluating each spouse’s contribution to business growth.​

Even if your business predates your marriage, the increase in value during the marriage will likely be considered a matrimonial asset. Courts may apply various methodologies to calculate this marital accrual, including the accountancy method, linear method, or intuitive approach.​​

Post-Separation Accrual

Post-separation accrual refers to increases in business value after the separation date. This can be particularly contentious when business interests fluctuate significantly over relatively short periods. The court may consider factors such as each spouse’s contributions to business growth during separation, whether the growth was passive or the result of active endeavour, and the proportion of post-separation value attributable to each party.​​

In recent cases involving business valuations at separation versus sale, courts have shown a willingness to distinguish between passive market growth (which remains matrimonial) and active post-separation work that genuinely enhanced value beyond market conditions. This nuanced approach recognises that not all post-separation growth should be equally shared, particularly where one spouse has made exceptional efforts to grow the business after relationship breakdown.

Protecting Your Business Before and During Marriage

business assets divorce

Proactive planning offers the most effective protection for business assets in the event of divorce. Whilst no strategy provides guarantees, several legal mechanisms can significantly reduce risk and provide clarity about how business interests will be treated.​​

Pre-Nuptial Agreements

Pre-nuptial agreements (prenups) are among the most effective tools for protecting business interests before marriage. These agreements outline how assets, including business interests, will be divided in the event of divorce.​​

Whilst prenups are not automatically legally binding in England and Wales, courts increasingly give them substantial weight, provided they meet specific criteria. The landmark case of Radmacher v Granatino significantly enhanced the status of prenuptial agreements, with the Supreme Court ruling that courts should uphold prenups where it is fair to do so.​​

For a prenuptial agreement to carry maximum weight with courts, it must meet several requirements. Both parties must enter the agreement freely, without duress or undue pressure. Each party must receive independent legal advice from separate solicitors who can explain the agreement’s implications. Full financial disclosure must be provided by both parties, ensuring each person understands what they’re agreeing to. The terms must be fair and reasonable both when executed and when potentially enforced years later. The agreement should be executed at least 28 days before the marriage ceremony to demonstrate it was not a last-minute decision.​

Pre-nuptial agreements can include specific provisions to ring-fence business interests. They can specify that the business-specific business assets should remain with the original owner, establish a business valuation at the time of marriage to distinguish pre-marital value from marital growth, and stipulate that the non-owning spouse will not make claims on business assets, protecting shareholders or partners from being affected by your divorce.​​

For business owners with family enterprises, inherited farming assets, or succession planning concerns, prenups provide invaluable clarity and protection. They allow you to agree calmly in advance how assets would be shared, rather than negotiating when emotions run high during divorce proceedings.

Post-Nuptial Agreements

If you’re already married and didn’t execute a prenup, a post-nuptial agreement offers similar protection. These agreements are made during marriage and can be particularly valuable if your business circumstances change significantly, such as when you establish a new company, receive substantial investment, or your business value increases dramatically.​​

Like prenups, postnups are not legally binding, but courts will generally uphold them if they are fair and both parties received proper legal advice. Post-nuptial agreements can address protection of business assets, financial arrangements for children from previous relationships, changes in circumstances since marriage, and succession planning for family businesses.​

Shareholder and Partnership Agreements

If you own a business with other parties, shareholder agreements or partnership agreements should include provisions addressing what happens if one owner divorces. These agreements can specify restrictions on share transfers, require divorced shareholders to offer shares to remaining shareholders first, establish valuation methodologies in advance, and protect the business from claims by divorcing spouses.​​

Such provisions protect not only you but also your business partners, providing security that their interests won’t be adversely affected by your divorce. Clear documentation also facilitates smoother negotiations during divorce proceedings because the framework for handling business interests is already in place.​​

Maintaining Financial Boundaries

Keeping business and personal finances completely separate strengthens the argument that the business should be treated as your personal property. This means maintaining separate bank accounts for business and personal use, avoiding paying household expenses directly from business accounts, documenting all financial transactions meticulously, and ensuring any spousal involvement in the business is compensated correctly and recorded.​​

Clear financial boundaries and thorough documentation provide an audit trail demonstrating the business’s independence from marital finances. This evidence can prove invaluable during disclosure and settlement negotiations.

The Divorce Process: What Business Owners Need to Know

The Divorce Process

When divorce proceedings begin, business owners face unique challenges and obligations. Understanding the process and your responsibilities will help you navigate this difficult period whilst protecting your business interests.

Financial Disclosure Requirements

Full and frank financial disclosure is legally mandatory in divorce proceedings. You must disclose all business interests, regardless of whether you consider them protected. This disclosure typically occurs through Form E, a comprehensive financial statement that includes company accounts, management accounts, asset registers, loan and liability records, tax documents and returns, and business valuations if available.​​

Missing or unclear financial records can significantly slow the process and damage trust between parties. If the court suspects you’re hiding or undervaluing assets, it may draw adverse inferences against you, potentially resulting in a less favourable settlement.​

Your spouse’s solicitor may request extensive business documentation to verify the information you’ve provided. Forensic accountants may be instructed to examine your company’s books, identify whether income is being artificially reduced, investigate whether assets have been transferred or concealed, and assess the actual value of the business.​

Freezing Orders

If you have legitimate concerns that your spouse might attempt to devalue business assets or transfer them to prevent fair division, you can apply for a freezing order. This is a type of injunction that prevents your spouse from dealing with assets.​​

To obtain a freezing order, the court must be satisfied that there is a genuine risk your spouse will dispose of or devalue assets and that this action would prejudice your ability to obtain a fair share in the financial settlement. If you suspect such behaviour, acting quickly is essential. Preventative action through a freezing order is far preferable to attempting remedies after assets have already been transferred or depleted.​

Settlement Structures and Options

Courts rarely order the sale of a functioning business, preferring solutions that preserve business operations whilst ensuring fair division of wealth. Several settlement structures may be appropriate depending on your circumstances.​​

Asset offsetting allows one spouse to retain full ownership of the business whilst the other receives assets of equivalent value. For example, if you keep your business valued at £500,000, your spouse might receive the family home, which is also worth a similar amount. This approach provides a clean financial break and avoids disrupting business operations.​​

Buyout arrangements involve one spouse purchasing the other’s interest in the business. Buyouts can be financed through cash payments, instalment plans, or trading off other marital assets of equivalent value, such as property, pensions, or investments. Professional appraisal is crucial to establishing fair market value and preventing future disputes.​

Spousal maintenance is another option in which one spouse makes ongoing payments from the business’s income. This may be appropriate if the company has sustained the couple’s lifestyle throughout the marriage and ensures that, whilst the industry remains under one spouse’s control, its income continues to support both parties.​

Staged payments can address liquidity concerns. Suppose your business lacks sufficient cash to fund an immediate lump sum settlement. In that case, the court may order payments over time, allowing the company to maintain working capital whilst gradually satisfying the settlement obligation.​

Selling the business is generally considered a last resort. Courts may order a sale if both spouses are equally involved in the industry and cannot agree on alternative arrangements. No other assets exist to offset the business value. However, this outcome is rare and typically occurs only when all other options have been exhausted.​

Impact on Business Operations

Divorce proceedings can significantly affect your business beyond the financial settlement. The stress and time demands of divorce inevitably distract from running your company. Some business owners feel less motivated to grow their business if they believe increased value will only benefit their ex-spouse.​​

Staff morale and productivity can suffer if employees sense instability. Clear, consistent communication with your team, without revealing inappropriate personal details, helps maintain confidence and stability during this uncertain period.​

If the business employs your spouse, you may face employment law complications requiring specialist advice. Terminating a spouse’s employment during divorce proceedings carries significant legal and financial risks that must be carefully managed.​​

Continuing to Run the Business Post-Divorce

Some divorcing couples must continue operating their business together, particularly when the enterprise cannot easily be divided or sold. Whilst rare, this arrangement can work if both parties maintain mutual respect and share a vision for the business.​​

Several strategies can facilitate shared business management post-divorce. Consider appointing a neutral managing director to oversee daily operations, minimising the need for direct interaction. Divide responsibilities clearly, focusing on separate business areas to reduce day-to-day communication requirements. Establish formal communication protocols and adhere to them strictly, such as limiting business discussions to scheduled meetings or using third-party mediators for disputes. Formalise all agreements about ownership, management, and profit distribution in writing to prevent misunderstandings. Agree on exit strategies for either or both parties should continued cooperation become impossible, including provisions for business sale, buyouts, or phased exits.​

However, experience shows that continuing to operate a business with your ex-partner is highly challenging for most couples. Unless you both possess enormous trust and respect for one another, this arrangement will likely prove difficult and may ultimately harm the business.

Tax Implications of Dividing Business Assets

Tax Implications of Dividing Business Assets

The tax consequences of transferring or dividing business assets during divorce can be substantial and must be carefully considered when negotiating settlements.​​

Capital Gains Tax

Transferring shares or selling business assets can trigger Capital Gains Tax (CGT) liabilities. However, if business shares are transferred between spouses within the same tax year of separation (or before separation), this can be treated as an exempt transfer, avoiding immediate tax liability.​​

It’s crucial to understand that, even if the transfer is initially exempt, the asset may still be subject to CGT if sold in the future. The receiving spouse effectively inherits the original owner’s acquisition cost basis, meaning they will face CGT on the full gain when they eventually dispose of the asset.​

Business Asset Disposal Relief

In certain circumstances, shareholders disposing of their shares can rely on Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) to reduce CGT rates. This relief can result in a CGT rate of 10% rather than the standard higher rate, potentially saving significant sums on qualifying disposals.​​

However, strict conditions must be met to qualify for this relief, including minimum ownership periods and active involvement in the business. These requirements should be carefully assessed before structuring any business asset transfers.​

Stamp Duty

Receiving shares as part of a divorce settlement may result in stamp duty charges, depending on the structure of the transfer. Proper tax planning can sometimes minimise or eliminate these charges, but this requires specialist advice.​

Income Tax Considerations

If your settlement involves ongoing maintenance payments derived from business income, the income tax treatment of these payments must be considered. Spousal maintenance payments are typically made from post-tax income and are neither deductible for the payer nor taxable to the recipient.​

Given the complexity and potential significance of tax implications, obtaining tailored advice from a qualified accountant or tax adviser is essential. Structuring transfers and settlements in tax-efficient ways can save substantial sums and avoid unexpected tax burdens that could significantly impact the fairness of the settlement.

What Courts Consider When Dividing Business Assets

Courts exercise broad discretion when dividing assets in divorce, guided by Section 25 of the Matrimonial Causes Act 1973. Understanding the factors courts consider helps you anticipate likely outcomes and negotiate effectively.​​

The Section 25 Factors

Courts must consider a comprehensive checklist of factors when determining fair financial settlements. The income and earning capacity of both parties, now and in the foreseeable future, influence how business income and potential are assessed. Financial needs, obligations, and responsibilities of both parties, now and in the foreseeable future, affect whether business assets must be accessed to meet essential needs.​​

The standard of living before the relationship breakdown provides context for assessing reasonable needs and expectations. The age of the parties and the duration of the marriage influence how assets are divided, with longer marriages typically resulting in a more equal division. Any mental or physical disability of either party affects needs and earning capacity assessments.​

Contributions of both parties to the family’s welfare are considered, including non-financial donations such as homemaking and childcare. Courts specifically recognise that whilst one spouse built the business, the other may have made equally valuable contributions by supporting the family. The conduct of the parties is considered only in limited circumstances where behaviour is so extreme that it would be inequitable to disregard it.​

Needs, Compensation, and Sharing

The landmark cases of Miller v Miller and McFarlane v McFarlane established three guiding principles that courts apply when dividing assets in high-net-worth divorces involving business interests. These principles require courts to meet both parties’ reasonable needs, compensate for any economic disparity arising from the marriage (such as one spouse sacrificing career development to support the family), and fairly share the assets accumulated during the marriage.​

These principles ensure that courts consider not only existing business assets but also future earning capacity and the contributions made by both parties to acquiring and maintaining wealth.​

The Interests of Children

First consideration must be given to the welfare of any children under 18. This principle significantly influences housing needs, income requirements, and the overall structure of financial settlements. If keeping the family home for the children’s benefit is prioritised, this may affect the amount of business value that can be accessed for division.​

Practical Steps to Protect Your Business During Divorce

Protect your business during divorce

If you’re facing divorce as a business owner, taking immediate, strategic action can significantly protect your interests and improve your settlement outcome.​​

Engage Specialist Legal Advice Early

The sooner you seek advice from family law solicitors experienced in business asset cases, the more options you’ll have. Specialist solicitors understand the unique challenges business owners face and can develop strategies to protect your company whilst achieving a fair settlement.​​

Edwards Family Law is a boutique law firm specialising in complex divorce and family law matters for high-net-worth individuals. With significant experience representing business owners, directors, and entrepreneurs, the firm provides tailored, discreet advice designed to protect your business interests and secure your financial future. The team regularly handles cases involving business valuations, offshore assets, large property portfolios, and complex financial structures.​

Explore Non-Court Dispute Resolution

Alternative dispute resolution methods such as mediation, collaborative law, or arbitration can help you reach agreements without the disruption, expense, and publicity of court proceedings. These approaches often yield more creative, business-friendly solutions because you retain control over the outcome rather than leaving decisions to a judge.​​

Mediation involves a neutral third party helping you and your spouse negotiate directly, potentially saving substantial legal costs whilst preserving business confidentiality. Collaborative law brings both parties and their solicitors together with a commitment to settle without court intervention. These processes are less adversarial and can help maintain working relationships if you need to continue operating a business together post-divorce.​​

Assemble Your Professional Team

Divorce involving business assets requires a multidisciplinary approach. Alongside your divorce solicitor, you should involve a financial planner to assess long-term implications and structure settlements tax-efficiently. A forensic accountant or business valuer provides expert analysis of your business’s value and sustainable income. Your existing accountant can give historical context and documentation.​​

If your business has partners or shareholders, a corporate solicitor ensures any agreements or share transfers comply with existing corporate governance documents. An employment law specialist may be necessary if the business employs your spouse. A therapist or coach can help you manage emotional strain, enabling more transparent decision-making during this stressful period.​​

Maintain Transparency and Cooperation

Attempting to hide, undervalue, or transfer business assets will severely damage your credibility and likely result in court sanctions. Courts take an extremely dim view of dishonesty and may draw adverse inferences that harm your settlement position.​

Full, frank disclosure from the outset, even of assets you believe are protected, demonstrates good faith and facilitates negotiations. Providing comprehensive, well-organised documentation speeds the process and reduces professional fees. Cooperating with reasonable requests for information, whilst protecting genuinely confidential commercial details, helps build trust and move towards settlement.​

Protect Confidential Business Information

Whilst full financial disclosure is mandatory, you can take steps to ensure sensitive commercial information remains confidential. Having all parties involved sign specific confidentiality agreements protects proprietary information. You can restrict access to sensitive information within legal teams to only essential personnel. If specific business details could harm your competitive position if disclosed, you can request that the court impose reporting restrictions or limit document distribution.​​

These measures balance your disclosure obligations with legitimate business confidentiality concerns.​

Consider Business Structure and Operations

Review your business structure with corporate and tax advisers to ensure it’s optimised for the current situation. If appropriate, consider whether restructuring could provide better asset protection going forward. However, any changes must be genuine commercial decisions made transparently; attempting to restructure specifically to defeat your spouse’s claims will backfire.​

Keep business partners informed appropriately, without breaching confidentiality obligations, to maintain business stability. Partners deserve reassurance that the business’s interests are being protected and that divorce proceedings won’t threaten the company’s viability.​

Frequently Asked Questions

Is my spouse entitled to half of my business?

Not automatically. Whilst matrimonial assets are typically divided equally, the court aims for a fair outcome rather than a rigid 50/50 split. If your business was established before marriage, the pre-marital value may be excluded from division. Courts prefer to leave the company with the business-owning spouse and compensate the other party with alternative assets or maintenance. The final division depends on numerous factors, including the length of marriage, both spouses’ contributions, available assets, and each party’s needs.​​

Will my business be considered in my divorce?

Yes. Any business interest you hold must be disclosed and will be included in the overall asset calculation. Even if your business is structured as a limited company, your shareholding represents a valuable asset that must be considered. The court will assess the business’s value and determine how it should be treated within the financial settlement.​​

Does it matter whether I’m a sole trader, a partner, or a limited company director?

Yes, business structure significantly affects how assets are owned and valued. Sole traders have no separation between business and personal assets. Partnerships involve shared ownership that partnership agreements may restrict. Limited companies exist as separate legal entities, so you own shares rather than business assets directly. However, none of these structures provides automatic protection from divorce claims; all will be considered in the asset division.​​

How is a business valued in a divorce?

Valuation depends on your business type and circumstances. Standard methods include asset-based valuation (total assets minus liabilities), earnings-based valuation (future income-generating capacity), and market-based valuation (comparisons with similar businesses sold). Courts typically appoint a single joint expert, usually a forensic accountant, to conduct an impartial valuation. The expert analyses financial statements, management accounts, tax documents, and trading performance to determine what a hypothetical buyer would pay.​​

How can I protect my business in a divorce?

The most effective protection comes from pre-nuptial or post-nuptial agreements that specifically ring-fence business interests. Maintaining a clear separation between business and personal finances strengthens protection arguments. Shareholder or partnership agreements should include divorce provisions. Once divorce proceedings begin, engage specialist legal advice immediately, provide full financial disclosure, explore mediation or collaborative approaches, and consider whether asset offsetting or buyout arrangements can preserve your business whilst achieving a fair settlement.​​

Will the business I established before marriage be treated differently?

Potentially. Pre-marital business value is often considered non-matrimonial and may be excluded from division if sufficient other assets exist to meet both parties’ needs. However, any increase in business value during the marriage will likely be matrimonial and subject to sharing. The Jones v Jones case established important principles distinguishing pre-marital business value from marital growth. Courts may apply various methodologies to calculate this distinction.​​

What happens if both spouses want to keep running the business?

If the business cannot be easily divided and both spouses wish to continue, you may need to operate it together post-divorce. This requires exceptional trust, respect, and clear boundaries. Strategies include appointing a neutral manager, clearly dividing responsibilities, establishing formal communication protocols, and agreeing on exit strategies if cooperation becomes impossible. However, most divorcing couples find it extremely challenging to continue working together, and this arrangement frequently fails.​

Can the court force me to sell my business?

Court-ordered business sales are rare and considered a last resort. Courts strongly prefer solutions that maintain business operations whilst compensating the other spouse through alternative assets or payments. A forced sale might be ordered only if both spouses are equally involved, cannot agree on alternatives, the business is the only significant asset, and no other solution would achieve fairness.​​

What are the tax implications of dividing business assets?

Transferring shares or business assets can trigger Capital Gains Tax, though transfers between spouses during the same tax year as separation may be exempt initially. However, the receiving spouse inherits the CGT liability for future disposal. Business Asset Disposal Relief may reduce CGT rates on qualifying disposals. Stamp duty may apply to share transfers depending on the structure. Given the complexity, obtaining specialist tax advice is essential to structure settlements tax-efficiently.​​

How much does a business valuation cost in a divorce?

Professional business valuations typically cost between £5,000 and £25,000 or more, depending on the business’s complexity. Factors affecting cost include business structure, financial complexity, number of valuers required, and whether valuations at multiple dates are needed. Before commissioning a valuation, consider whether it’s necessary for your circumstances in some cases, parties can agree on value without formal expert reports.​

Taking the Next Steps

Divorce whilst owning a business represents one of the most challenging situations you can face. The intersection of personal relationship breakdown and your professional livelihood creates complexity that requires specialist expertise, strategic planning, and careful execution.​​

The key to protecting your business lies in early, proactive engagement with experienced family law solicitors who understand business assets. Whether you’re contemplating divorce, currently in proceedings, or simply want to protect your business for the future, expert legal advice tailored to your specific circumstances is essential.​​

Edwards Family Law specialises in representing business owners, directors, and high-net-worth individuals facing complex divorce proceedings. The boutique firm’s team has extensive experience with business valuations, financial settlements involving trading companies, protecting business interests during divorce, pre-nuptial and post-nuptial agreements for business owners, and navigating international and multi-jurisdictional business assets.​

Based in London and serving clients throughout England and Wales, Edwards Family Law provides the personalised, discreet service you need during this challenging time. The firm’s solicitors understand that your business represents more than financial value, it embodies years of hard work, your professional identity, and often your primary source of income.​

Don’t wait until divorce proceedings begin to protect your business interests. Whether you need advice on pre-nuptial agreements, are facing divorce, or require guidance on business asset protection strategies, contacting Edwards Family Law for a confidential initial consultation is the first step towards safeguarding your business and securing your financial future.

To book your confidential consultation with Edwards Family Law’s specialist business divorce solicitors, visit edwardsfamilylaw.co.uk or call 020 3983 1818. The firm’s experienced team is ready to provide the expert guidance you need to protect your business whilst navigating divorce proceedings with confidence and clarity.

Get Divorce Advice If You Notice These 7 Critical Warning Signs

Every marriage experiences challenges, and many people struggle to decide whether getting a divorce is the right step for them. Deciding to get a divorce is a significant and personal choice, and seeking professional advice can help once you have decided to move forward. As experienced family law solicitors, we know similar warning signs consistently appear before couples seek divorce advice, and understanding these patterns can help you make well-informed decisions about your future, especially if you are considering getting a divorce.

Navigating the divorce process and post-separation issues with an ex-partner can be challenging, as it often involves addressing both legal and emotional aspects to ensure a smoother transition.

If you’re considering a divorce or have questions about the divorce process in England or Wales, contact our team at Edwards Family Law. Getting a divorce involves several legal steps, and our team can help you decide the best approach for your situation. We understand the challenges people face when going through a divorce and the importance of professional guidance. We specialise in complex divorce, and we can guide you through the entire divorce process. Whether you’re looking for a solicitor for divorce or need assistance with divorce mediation, our team is here to help you every step of the way.

Understanding When Your Relationship Has Reached a Breaking Point

Marriage naturally involves ups and downs, but distinguishing between temporary rough patches and fundamental relationship breakdowns requires careful consideration. Deciding between separation and divorce is a major step, and reaching an agreement with your partner can sometimes make the process smoother. When couples finally seek divorce advice, they often realise they’ve been ignoring warning signs for months or even years. The key is recognising these patterns early enough to either address them effectively or make a well-informed decision about your marriage’s future.

Under the current legislation in England and Wales, there is a minimum timeframe of six months for divorce proceedings. There is a mandatory period of twenty weeks from the application stage to conditional order, followed by six weeks from conditional order to final order. This required twenty-week period allows couples the opportunity to reflect before the conditional order is issued, which is when many couples start to feel ‘divorced,’ even though the legal dissolution is not finalised until the final order. This reflection period can also be used for deciding whether to proceed with divorce or consider separation.

Understanding Civil Partnerships and Their Unique Challenges

Civil partnerships are a legally recognised way for two people to formalise their relationship, offering many of the same rights and responsibilities as marriage. However, when it comes to ending a civil partnership, there are unique challenges that can arise during the divorce process. The legal steps for dissolving a civil partnership are similar to those for divorce, but there are important differences in terminology and procedure that can affect your case.

If you are considering ending your civil partnership, it is essential to seek legal advice from a family law solicitor who has experience with civil partnerships, such as our firm. We can guide you through the divorce proceedings, explain the no-fault divorce process, and help you understand your rights and obligations under family law. Navigating the family court system can be complex, especially if there are issues involving children, property, or finances. A solicitor can ensure that your interests are protected and that you follow the correct legal processes from start to finish.

Whether you are dissolving a civil partnership or ending a marriage, the law provides a clear process for reaching a fair outcome. By seeking professional advice early, you can avoid unnecessary complications and make informed decisions about your future. Remember, every family is unique, and a family law solicitor can tailor their advice to your circumstances, helping you achieve the best possible result.

The 7 Essential Warning Signs That Signal It’s Time for Divorce Advice

Get Divorce Advice from Edwards Family Law

Sign #1: Communication Has Completely Shut Down

When conversations become forced or disappear entirely, your marriage may be in trouble. If dinner times are silent and you feel like you’re living with a flatmate rather than a life partner, this communication breakdown often signals the need for professional divorce advice.

Healthy marriages require open dialogue, but when one or both partners stop trying to communicate, the relationship becomes emotionally barren. This silence doesn’t just indicate temporary stress; it often reflects deeper issues that require professional intervention to resolve or properly evaluate. Our experienced solicitors regularly encounter clients who describe feeling completely disconnected from their spouse, unable to discuss even basic household matters without tension or complete avoidance.

Sign #2: You Feel Like You’re Constantly Walking on Eggshells

Living in constant fear of your partner’s reactions creates an unhealthy dynamic that destroys intimacy and trust. Whether you’re avoiding conversations due to a partner’s explosive temper or fear of emotional manipulation, walking on eggshells is never acceptable in a healthy relationship.

This behaviour pattern often indicates deeper control issues or emotional difficulties that require immediate attention. Continuing in such an environment puts you at risk of harm to your emotional and physical well-being. If you find yourself changing your behaviour to avoid confrontation, seeking divorce advice can help you understand your options and rights in this situation. Our team at Edwards Family Law understands these complex dynamics and can guide you through the process with sensitivity and expertise.

Sign #3: You’re the Only One Fighting to Save the Marriage

Relationships require effort from both partners, and when only one person is working to maintain the connection, the marriage is destined to fail. If your partner has emotionally checked out whilst you continue making desperate attempts to reconnect, this imbalance signals serious relationship dysfunction.

One-sided efforts create resentment and exhaustion that ultimately damage your mental health and self-worth. Professional divorce advice can help you evaluate whether your marriage has reached a point where continued efforts are counterproductive. We specialise in complex divorce situations and can guide you when it might be time to consider alternative approaches to your relationship difficulties.

Sign #4: Your Personal Identity Has Been Completely Lost

When you’ve lost yourself entirely within your marriage, it may be time to seriously consider seeking divorce advice. Healthy relationships should enhance your identity, not completely absorb it. If you no longer recognise the person you’ve become or feel like you’ve sacrificed everything for a relationship that doesn’t reciprocate, professional guidance becomes essential.

Identity erosion often happens gradually, making it difficult to recognise until the damage becomes severe. This loss of self can impact every aspect of your life, from career decisions to friendships, creating long-term consequences that extend far beyond your marriage. Our solicitors understand the importance of helping clients reclaim their sense of self throughout the divorce process.

Sign #5: You’re Staying Together ‘For the Children’s Sake’

Remaining in an unhappy marriage solely for your children’s benefit often causes more harm than divorce would create. Children naturally absorb the tension and negativity in dysfunctional households, potentially learning unhealthy relationship patterns that affect their future romantic connections.

When parents model unhealthy relationships, children may grow up believing that constant conflict, emotional distance, or toxic dynamics are normal in marriages. Seeking divorce advice can help you understand how to prioritise your children’s wellbeing while making decisions about your marriage’s future. Our team can guide you through divorce mediation and other child-focused approaches to ensure the best outcomes for your family. Making arrangements with the other parent is also an important part of ensuring the best outcomes for your children.

Sign #6: Your Physical and Mental Health Are Deteriorating

Chronic relationship stress can manifest in physical symptoms.  When your marriage consistently damages your mental health through anxiety, depression, or constant emotional turmoil, professional divorce advice becomes crucial for your well-being.

Your health should never be sacrificed for a relationship that consistently causes distress. If you’re experiencing persistent health problems that correlate with relationship stress, consulting with professionals about your options can provide clarity about the best path forward. We understand the toll that marital difficulties can take on your overall well-being.

Sign #7: You Feel More Like Roommates Than Life Partners

When emotional and physical intimacy disappears and you’re simply cohabiting without a genuine connection, your marriage has fundamentally changed. If you find yourselves living parallel lives in the same house without meaningful interaction or affection, this disconnection often signals the need for divorce advice.

This roommate dynamic typically develops over time as couples grow apart emotionally. Without shared goals, intimate conversations, or physical affection, the marriage becomes a practical arrangement rather than a loving partnership. Our experienced solicitors can help you evaluate whether this disconnection is temporary or indicates deeper incompatibility.

Serious Red Flags That Demand Urgent Divorce Advice

Urgent Divorce Advice

Domestic Abuse and Violence: When Safety Must Come First

Domestic abuse and violence are serious issues that can affect anyone, including those in civil partnerships. If you are experiencing domestic abuse, your safety and the safety of your children must always come first. There are legal protections available to help you, and it is important to seek support as soon as possible.

A solicitor can help you apply for a court order to protect yourself and your children from further harm. If you are worried about the cost of legal help, you may be eligible for legal aid, which can cover the costs of legal representation and support. There are also organisations and helplines, such as the National Domestic Abuse Helpline, that can provide immediate assistance and practical information.

Remember, you do not have to face this situation alone. Legal professionals are experienced in dealing with cases of domestic abuse and can guide you through the process of securing protection and support. Your well-being and that of your children are the top priority, and there are resources available to help you move forward safely.

Psychological Manipulation and Controlling Behaviour

If your partner uses emotional manipulation, gaslighting, or controlling tactics to dominate the relationship, seeking immediate divorce advice becomes essential. These behaviours often escalate over time and can cause lasting psychological damage.

In some cases, it may be necessary to seek a court order to protect yourself or your children from further harm.

Repeated Infidelity and Broken Trust

When trust has been repeatedly broken through infidelity or other betrayals, professional guidance can help you understand your options and rights. Our team handles these sensitive situations with discretion and expertise.

Social Pressure Is Your Only Reason for Staying

If fear of judgment from family, friends, or community is preventing you from addressing serious marital problems, divorce advice can help you prioritise your genuine wellbeing over external expectations.

Essential Steps Before Making Your Final Decision

Actions to Consider When These Warning Signs Appear

Before making any major decisions, document patterns of behaviour, as this documentation can help you provide evidence if legal action becomes necessary, and consider whether professional counselling might address some issues. However, don’t delay seeking divorce advice if you’re experiencing serious problems.

Mental and Emotional Preparation for Major Life Changes

Understanding the divorce process in England and Wales can help reduce anxiety about the unknown. The mandatory twenty-week reflection period provides time to ensure you’re making the right decision for your circumstances. Typically, a dissolution takes several months from start to finish, but the exact duration can vary depending on factors such as financial settlements, property division, and arrangements for children.

Safeguarding Your Wellbeing and Your Family’s Future

Consider practical matters such as finances, housing, and what will happen to the family home during the divorce process, as well as children’s arrangements. If you are facing financial difficulties during separation, you may be eligible for financial help, such as Housing Benefit, Universal Credit, or other support schemes. Our team can guide you through these complex considerations whilst protecting your interests.

Navigating Family Court Proceedings

The family court process can feel overwhelming, especially if you are unfamiliar with the legal system or facing a difficult divorce. A family law solicitor can help you understand each stage of the divorce process, from filing your application to attending hearings and finalising arrangements for children and finances.

Your solicitor will explain the legal requirements, represent your interests in court, and ensure that your rights are protected throughout the proceedings. They can also help you prepare the necessary documents, gather evidence, and communicate effectively with the court and the other party. Having professional support can make a significant difference in achieving a fair and positive outcome for you and your family.

If you are concerned about any aspect of the process, do not hesitate to ask your solicitor for advice. They are there to guide you through the legal processes and help you make informed decisions at every step.

What to Expect in Court

If your divorce proceedings require you to attend court, it is natural to feel anxious about what to expect. Your solicitor will explain the court process in detail, so you know what will happen at each stage. They will help you prepare your case, organise your documents, and ensure you understand how to present your situation clearly and confidently.

During the hearing, the judge will listen to both sides and make decisions based on the evidence and the law. Your solicitor will be by your side to support you, answer your questions, and help you communicate effectively with the judge. It is important to stay calm, listen carefully, and speak honestly about your circumstances.

Remember, the court is there to ensure a fair process and to protect the interests of everyone involved, especially children. With the right legal support, you can approach your court appearance with confidence and work towards the best possible outcome for your future.

Applying for a Divorce: Your First Legal Step

Taking the first step to apply for a divorce or dissolution of a civil partnership is a significant moment in the divorce process. In England and Wales, you are eligible to apply for a divorce or dissolution if you have been married or in a civil partnership for at least one year. This initial stage involves making a formal divorce application, which can be submitted either jointly with your partner or by yourself if you are ready to move forward independently.

It is important to note that the law changed in April 2022, which has affected the steps and procedures for divorce and dissolution applications.

The divorce process is designed to be as straightforward as possible, but it is still a legal procedure with specific requirements. Whether you are ending a marriage or a civil partnership, understanding your rights and responsibilities from the outset is crucial. Applying for a divorce is not just about ending a legal relationship, it is about setting the foundation for your future, including arrangements for children, finances, and property. If you are unsure about any aspect of the process, seeking legal advice early on can help you make informed decisions and avoid unnecessary complications.

Understanding the Application Process

The process of applying for a divorce or dissolution involves several key steps. First, you will need to prepare and submit your divorce application, which outlines your intention to legally end your marriage or civil partnership. This application can be made online or by post, and it must be served on your partner, who will then have the opportunity to respond.

It is highly recommended to seek legal advice from a family law solicitor before starting the divorce application. A solicitor can explain the legal processes involved, help you understand your rights, and provide guidance on sensitive issues such as domestic abuse, child arrangements, and financial orders. If your situation involves complex family dynamics or concerns about your safety, a family law solicitor can ensure that your interests are protected throughout the process. They can also advise you on the best approach to take, whether that involves mediation, negotiation, or court proceedings.

Key Documents and Requirements

When you apply for a divorce or dissolution, you will need to provide certain essential documents. The most important is your marriage certificate or civil partnership certificate, which proves that your relationship is legally recognised. You will also be asked to provide detailed information about your personal circumstances, including your income, expenses, and any assets you and your partner hold.

If you have children, you will need to outline the current arrangements for their care, including where they live and how much time they spend with each parent. Providing accurate and complete information at this stage is vital, as it helps the court make informed decisions about your case and can prevent delays in the divorce process. Being thorough and honest about your circumstances will also help your solicitor give you the best possible advice and support.

What to Expect After Filing

Once your divorce application has been filed, you will receive confirmation from the court, and your partner will be formally notified. Your partner will then have the opportunity to respond to the application. If they do not respond, the court may proceed with the divorce or dissolution without their input. However, if your partner contests the application or disputes any aspect of the process, you may be required to attend court hearings to resolve the issues.

Throughout this period, it is important to have the support of a family law solicitor, who can represent you in court and help you navigate the legal processes involved. Your solicitor can also connect you with other services and support, especially if you are experiencing domestic violence or need urgent protection for yourself or your children.

Beyond the legal steps, it is essential to consider the emotional and practical impact of divorce, including changes to your living arrangements, finances, and family dynamics. A family law solicitor can provide practical information and guidance tailored to your circumstances, helping you achieve the best outcome for your future. Remember, the divorce process is a journey, and while it can be challenging, the right support can help you move forward with confidence and security.

Why Professional Divorce Advice Becomes Crucial

Navigating Complex Legal Territories and Rights

The divorce process involves numerous legal requirements and deadlines, many of which are handled in family court. Whether you’re looking for a solicitor for divorce or need assistance with divorce mediation, professional guidance ensures you understand your rights and obligations throughout the process.

Strategic Financial Planning for Your New Chapter

Money management is a key part of financial planning during divorce. Divorce involves complex financial considerations, including property division, pension sharing, other assets, and spousal maintenance. Our experienced solicitors can help you understand your financial position and ensure fair settlements that protect your future security.

It is important to assess what you can afford in terms of housing and living expenses after divorce. You should also consider the cost of legal proceedings and plan for these expenses. In some cases, you or your former partner may be required to pay legal fees or maintenance, and these payments need to be arranged clearly. Paying bills and other obligations on time during the transition is essential to avoid further financial stress. Some payments may need to be made or received as part of the settlement, so ensure you are paid what you are owed. If your income changes after divorce, explore eligibility for tax credits or other financial support to help manage your finances.

Building Healthy Co-Parenting Foundations

If children are involved, establishing effective co-parenting arrangements becomes crucial for their well-being and benefits families as a whole. We can guide you through creating arrangements that prioritise your children’s needs whilst protecting your parental rights.

Moving Forward: Creating Your Action Plan After Identifying These Signs

Once you’ve recognised these warning signs in your marriage, taking decisive action becomes important for your well-being. The six-month minimum timeframe for divorce proceedings in England and Wales provides adequate time to plan your approach carefully.

Consider whether divorce mediation or family mediation might be appropriate for your situation, as this can often help you deal with disputes and reach agreements without going to court. However, in cases involving manipulation, control, or abuse, direct legal representation may be more suitable.

Document important financial information and consider your housing needs, especially if children are involved. Certain issues, such as finances or child arrangements, may be dealt with separately from the main divorce process. Our team can help you understand what information you’ll need to gather, how to make clear agreements to protect your interests, and how to deal with arrangements throughout the process.

Speak to us

Speak to Our Lawyer

If you’re considering a divorce or have questions about the divorce process in England and Wales, don’t wait until problems escalate further. Contact our team of divorce lawyers at Edwards Family Law today. We specialise in complex divorce cases and can guide you through the entire divorce process with compassion and expertise.

Recent changes in the law have made the process for both marriages and civil partnerships more straightforward, and civil partnerships are now treated similarly to marriages in the divorce process. You now have the option to make a joint application for divorce or dissolution, which can simplify the process if both parties agree. You can also apply online for divorce or dissolution, making it more convenient and faster than applying by post. There is a court fee required for applications, but you may qualify for a reduction depending on your financial circumstances. It is important to consider applying for a financial order to formalise financial arrangements for yourself and any children. If you are in a civil partnership, you will need to make a dissolution application, which follows a similar process to divorce.

Whether you’re looking for a solicitor for divorce or need assistance with divorce mediation, our team is here to help you every step of the way. We understand that every situation is unique, and we’ll work tirelessly to achieve the best possible outcome for you and your family.

The mandatory reflection period built into the current divorce legislation ensures you have time to make considered decisions, but seeking professional divorce advice early can help you understand all your options and prepare effectively for the road ahead.

Speak to a top divorce lawyer today and take the first step towards protecting your future.

Speaking exclusively to Sky News, Our Senior Associate Charlotte Lanning explained that Prenups used to be associated with the ultra-wealthy and famous, but after the Radmacher v Granatino ruling, people became more aware of them.

Prenups

After that decision, prenups agreed by celebrity couples made headlines across the country, making them appear “glitzy” and desirable, Charlotte explained. “When I was first starting out, I would do prenups on the odd occasion, whereas now we always have a couple on the go each.”

While the ruling was a factor, Charlotte explained that the more recent increase in prenups has been driven by changes in society. People are getting married later and are less worried about looking unromantic.

“The fact that people are getting married a lot later in life… means there is more to argue over,” explaining that the older people are, the more likely they are to own businesses, properties or other assets.

Read the full article here

To learn more about Charlotte Lanning, you can reach her here, or to meet any of our expert team to discuss prenups. Please contact us here

Read the full article Here

What is Cohabitation?

Cohabitation refers to a situation where two people live together as a couple without being legally married or in a civil partnership. Often referred to as “living together” or erroneously as a “common-law marriage” (though the latter is not a legal term in the England and Wales), cohabiting couples typically share a home, finances, and a domestic life, but do not have the legal status of a married couple or civil partners.

Does Cohabitation Affect Divorce?

Cohabitation Affect Divorce

In England and Wales, cohabitation does not directly impact divorce, since divorce laws only apply to legally married couples or those in civil partnerships. However, for cohabiting couples who separate, there is no equivalent legal process for “divorce.” Instead, their separation is treated differently under family law, which can affect financial settlements, property rights, and other matters.

Key Differences Between Cohabitation and Divorce:

  1. Legal Rights:
    • Married Couples: When a married couple divorces, they are entitled to claim a fair division of assets and financial support, including spousal maintenance if necessary. The court has a broad discretion to divide assets based on factors such as each party’s contributions, the length of the marriage, and the needs of each party.
    • Cohabiting Couples: If a cohabiting couple splits up, there is no automatic legal right to share assets or receive spousal support. Property and assets are typically divided based on ownership, meaning that the person whose name is on the title or deed of a property generally retains ownership, unless the other party can prove a beneficial interest.
  1. Property Rights:
    • Married Couples: Upon divorce, married couples have the right to claim an equitable share of assets, including family homes, regardless of whose name is on the deed.
    • Cohabiting Couples: Cohabiting couples do not have automatic property rights. If the couple separates, the property is divided based on legal ownership, and the courts do not generally intervene to divide property unless there is a formal agreement, like a cohabitation agreement, or a claim to a beneficial interest (e.g., if both partners contributed to the mortgage or maintenance).
  1. Children’s Rights:
    • For both married and cohabiting couples, child arrangements and maintenance rights remain the same. Parents—whether married or cohabiting—have a duty to support their children financially, and both parties have the right to seek a child arrangements order through the courts if there is a dispute.

Cohabitation Agreements:

To avoid disputes upon separation, cohabiting couples can draft a cohabitation agreement, which outlines the division of assets, finances, and responsibilities should the relationship end. While this agreement is not legally binding, it can be used as evidence in court to determine asset division and financial responsibilities.

The Growing “Cohabitation Crisis”:

In the UK, the number of cohabiting couples has increased significantly in recent years. Despite this, there is a lack of legal recognition and protection for cohabitants when relationships end. Many people mistakenly assume that they have the same legal rights as married couples, which often leads to disputes when relationships break down. This has led to calls for reform to offer better legal protections for cohabiting couples, especially when it comes to financial support and property division.

Conclusion:

While cohabitation does not directly impact divorce in England and Wales, it creates a different set of legal considerations for couples who separate. Married couples have a clear legal process for divorce and financial settlements, whereas cohabiting couples may face difficulties when dividing assets or seeking financial support. It’s important for those living together without marriage to understand their legal rights and consider a cohabitation agreement to safeguard their interests in case of a split.

The short answer is no, but this does not mean that a pre-nuptial agreement UK is not worth entering into. Quite the opposite; if you are marrying and you have any concerns about how your existing assets or your future savings and asset purchases would be treated if you were to sadly divorce in the future, a ‘pre-nup’ is essential. It can have a drastic impact on the outcome of your finances in the event of a divorce. 

No-one enters into marriage thinking that they will get divorced, of course. We are not here to say that you will get divorced! Marriage is a symbolic commitment, but it is also, legally speaking, a major financial commitment. You are vowing to share your ‘property’ with the other person. Property includes the obvious ones such as real estate and physical possessions, but it also includes savings, and any increase in the value of any investments during the marriage. If you do not want to risk a large proportion, and in some instances half or even more, of those assets remaining in your spouse’s ownership following a divorce, then a pre-nuptial agreement is your only option. 

A pre-nuptial agreement is not a legally binding contract. This means that it will not necessarily be followed ‘word for word’, exactly to the letter, in the event of a divorce. This is to protect people from singing a pre-nuptial agreement that would leave them in an impossible financial situation before a wedding, without fully understanding its true implications, and then being held to it at a later date. 

uk prenuptial agreement

In order for a court to uphold a pre-nuptial agreement, it must have been freely entered into (i.e. not under duress) by both parties with a full appreciation of its implications. A full appreciation of its implications is generally viewed to require both parties having disclosed in full their finances to each other, and to have taken (or at least had the opportunity to have taken) proper legal advice before signing the pre-nuptial agreement. This way, both parties understand what they are potentially ‘giving up’, or are protecting/ gaining by signing the agreement.  

There is then a further sense-test that a pre-nuptial agreement must pass in order for a court to uphold it on divorce. This is that it must not be unfair to hold the parties to their agreement in the prevailing circumstances at the time of the divorce. This is to allow for the fact that a couple can rarely, if ever, foresee what their life will look like at the time of divorce when they are signing the pre-nuptial agreement before their marriage. They might have since taken on the full-time care of a dependant family member; they may have moved to a different part of the country; they may have taken on various financial commitments such as school fees and so on. Therefore the court retains some discretion in checking that following the terms of the pre-nup on divorce would not leave one party in a position of financial hardship or dire need. This is why it cannot be said that a pre-nup is legally binding.   

To ensure that this ‘sense-test’ does not defeat the pre-nuptial agreement, pre-nups are typically quite a flexible document. They will state some specific assets, or types of asset, that will not be shared with your spouse on divorce. This means that there will be no automatic concept of the assets being split between you just by virtue of your marriage – they will only be divided or sold in order for some amount to be paid to your spouse if there is a financial need to do so, i.e. some equity has to be freed up in order to help your spouse re-house or to pay for reasonable daily outgoings. However they will not set in stone every single aspect of financial considerations on divorce.    

Do not hesitate to get in touch with us here at Edwards Family Law to assist you in drawing up your pre-nup. Equally if you are already married but you think an agreement on your finances would help you, we can advise you on a “post-nup” or “mid-nup”. We are a leading firm recognised by the Legal 500.

Speaking exclusively to the Mirror about the likelihood of the footballer’s childhood sweetheart walking away with £13.5m, Kelly Edwards, managing partner of Edwards Family Law, said: “It’s very likely – the starting point in English law is that you share equally what has been made during the marriage, this includes cohabitation and so the fact they were childhood sweethearts (and presumably living together for quite a significant period) means she is entitled to share in those assets.”

Read the full article Here

Although we advise and represent many high net worth (HNW) people during their divorce, most of our clients are anxious about paying their legal costs, especially if the matter goes to the Family Court. HNW people are often wealthy in assets but short on liquid cash.

The perceived cost of litigation costs often results in people choosing to forgo legal advice and represent themselves in Court. This is a mistake as if your spouse has instructed an experienced divorce lawyer you will be at a significant disadvantage. Furthermore, it is extremely difficult for someone not trained and experienced in family law to successfully navigate the legal system and instruct expert witnesses etc.

There are several options available to cover your legal costs whilst your financial settlement is being agreed upon.

Self-funding

This is where you use your own capital to pay for your legal expenses. If you are in a financially stronger position than your spouse, you may choose to fund their legal costs. This will work to your advantage if it mitigates the risk of your spouse taking out a commercial loan at a high-interest rate, therefore reducing the capital available to be divided in the financial settlement. However, this should not be an open-ended commitment and your spouse should be encouraged to have a backup plan in case you have to withdraw your financial support.

Family and friends

If you receive financial help from a family member or a friend, make sure you ask your Family Law Solicitor how long they believe your divorce case will take to settle. Also, agree that notice will be provided if funding has to cease to ensure you do not continue to run up legal costs without any ability to pay them.

If the money from family and/or friends is in the form of a loan, it is always best to have a legal agreement drawn up. For example, you could agree that you will pay the money (plus any agreed interest) loaned for legal costs back once you receive the funds from your share of the financial settlement. The other reason for documenting the loan is so it can be presented in the Family Court as a debt that needs to be repaid.

Remortgaging your property

If you have enough equity in your family home, you can apply to remortgage your property. The advantage of remortgaging is the interest rate will be lower than that of a personal loan and the loan can carry on after your divorce is concluded.

Personal loan or credit cards

Personal loan or credit cards

Personal loans are available from many financial institutions including high street banks, independent lenders, even Sainsbury’s and Tesco. Your financial circumstances and the value of the loan will determine the interest rate. You will also need to pay an administration fee.

A bank will require confidence that you will receive a substantial financial settlement. To this end, an undertaking from your Solicitor and you that the debt will be paid will be required. Other third-party lenders may require security such as a charge over your property before they lend you any money.

Sears Tooth agreements

A Sears Tooth agreement is a deed that assigns the settlement you receive from your divorce to your Solicitor who will pay themselves in full before handing over the rest of the funds.

The agreement will need to be signed and witnessed after you have received independent legal advice. Furthermore, you will need to tell the Court and your spouse that you have entered into a Sears Tooth agreement.

Sears Tooth Agreements are now very rare as they are inherently risky for Solicitors and generally not necessary given the introduction of litigation loans, as discussed below. They also require the Solicitor to cover any disbursements themselves. However, experienced divorce lawyers who know that their client will receive a high-value settlement may enter into one if it means getting their client’s case over the line.

Litigation funding (also known as a litigation loan)

Litigation funding law

Litigation funding for divorce is essentially where a commercial lender loans you the funds you need to cover your legal costs and disbursements. The loan is repaid from the financial settlement you receive when your divorce is concluded.

Because the lender needs reassurance that they will get their money back, they may secure certain assets against the loan, for example, any property you own or valuable artwork but many do not. The lender will make an assessment of your case (guided by your solicitor) as to the likely outcome and how bug a loan you might need.

Although your divorce lawyer can advise you on how to obtain a commercial loan, you must receive legal advice from an independent Solicitor before you sign the loan agreement.

Court-ordered interim financial provision

If the financially weaker party in a divorce has no income or capital to meet their legal costs, and for whatever reason they cannot obtain a litigation loan, the Court can order the financially stronger party to pay. This ensures both parties can fairly pursue their case. A separate hearing will be held to determine if an interim financial provision is suitable. The Court will consider the following:

  • Is the dependent spouse’s case reasonable and are they taking every opportunity to settle the matter early? An example of this is trying mediation to resolve any disputes rather than insisting on going straight to Court. Any history of domestic abuse within the relationship will mean it is highly unlikely that mediation will be a suitable dispute resolution alternative.
  • Have commercial lenders been approached?

Your Solicitor will advise you on the risks of an interim financial provision application and the steps that must be taken beforehand – court should always be seen as the final resort for legal fees funding.

Final words

Having the finances available to see your divorce case through to the end can result in shorter court proceedings and encourage your spouse to settle early. At Edwards Family Law, we will explore every avenue that suits your financial situation to allow you to receive our specialist, astute divorce law advice.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about divorce and financial settlements, please phone +44 (0)20 3983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

It is well known that legal costs in divorce cases can easily escalate out of control, especially where proceedings continue over many months or even years. The recent divorce case of Xanthopoulos v Rakshina heard in the High Court is a perfect illustration of just how high these costs can be; described by Mr Justice Mostyn as “exorbitant”. Here we will take a closer look at the costs accrued in this case and what can be done to avoid such outcomes following separation.

What happened in the case of Xanthopoulos v Rakshina?

The case of Xanthopoulos v Rakshina, heard in the High Court in April 2022, concerned a Greek-born resident of Russia, Lazaros Xanthopoulos and his wife, Alla Aleksandrovna Rakshina. Ms Aleksandrovna is described in the judgement as the 75th richest woman in Russia with assets of over £300m and as holding a senior role with a Siberian supermarket. The parties married in Moscow in 2006 and separated in 2020. A Russian court agreed to the divorce in March 2021, but a financial remedy was not finalised at this time. Mostyn was highly critical of the parties on the basis that their filings missed the deadline set, and their skeleton arguments exceeded the 350-page limit by some 1,500 pages. On this matter, Mostyn stated:

“This utter disregard for the relevant guidance, procedure, and indeed orders is totally unacceptable. I struggle to understand the mentality of litigants and their advisers who still seem to think that guidance, procedure, and orders can be blithely ignored”. He also stated that he “struggled to find the language that aptly describes the exorbitance of the litigious conduct of the parties”.

The High Court was asked to consider a range of costs by the parties. In total, costs have amounted to between £7.2 million and £8 million, including £5.4 million incurred prior to the High Court hearing. This is eye-watering by any measure. Summing up his concerns about these costs, Mostyn stated:

Figures like this are hard to accept even in a conflict between the uber-rich…to run up in domestic litigation costs of between £7 million and £8 million is beyond nihilistic. The only word I can think of to describe it is apocalyptic”.

Strong words indeed.

Explaining how the system could be improved to avoid such high legal costs in family law disputes, he recommended that statutory measures be put in place to limit the scale and rate of costs. Alternatively, he suggested that the Family Procedure Rule Committee need to find a solution to the problem.

Echoes of the past?

This case may remind some of the fictional inheritance case of Jarndyce v Jarndyce in Charles Dickens’ Bleak House. The plot of this imagined case concerned a vast inheritance and legal proceedings that went on for so long that by the end, the entire estate had been swallowed up in legal costs, hence rendering any final decision moot. Explaining just how futile the proceedings were in the first chapter of Bleak House, Dickens writes, “Jarndyce and Jarndyce drones on. This scarecrow of a suit has, over the course of time, become so complicated that no man alive knows what it means. The parties to it understand it least; but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises”.

The story of Jarndyce v Jarndyce was itself inspired by historical examples of legal cases in which legal proceedings have gone on for decades, such as in the case of Sir George Downing in the late 1700s, which lasted for more than 40 years.

Admittedly, the more recent High Court case of Xanthopoulos v Rakshina did not lead to costs which exhausted the marital assets; it is nevertheless a reminder of just how far family disputes can extend if not kept in check.

How can divorce costs be kept under control?

The single most effective way to keep divorce-related costs under control while achieving a mutual and amicable outcome when it comes to financial and other agreements following divorce is to use Alternative Dispute Resolution (ADR). ADR includes a range of non-confrontational methods of reaching an agreement even on highly complex matters, such as mediation, negotiation, and arbitration.

Family law Solicitors who are members of the organisation Resolution have the skills and training to resolve matters such as child and divorce disputes outside of the court system. Resolution was founded over 40 years ago and is made up of family Solicitors who advocate a non-confrontational approach to family law issues, providing a better outcome for families and their children.

Outcomes are often much better than traditional court-based litigation as parties are encouraged to work together to find a mutual agreement. This results in improved compliance with any outcome reached (i.e. a long term willingness to abide by what is agreed between the parties) and helps to preserve relationships for the benefit of any children involved in the proceedings.

Furthermore, in most cases where mediation, arbitration, or negotiation are used to reach a financial resolution following divorce, costs are typically much lower than traditional court litigation.

Final words

As Mostyn makes clear in his remarks in the case of Xanthopoulos v Rakshina, legal costs for divorce proceedings need to be capped or controlled in some way to prevent endless litigation, wrangling, and the excessive use of court time. As such, the courts do not offer the optimal route for such disagreements, even where settlements can reach millions of pounds. ADR methods such as those advocated by Resolution are not just for straightforward disputes of lower value; they are equally suited to highly divisive high-net-work divorce proceedings.

Edwards Family Law is a niche London-based firm specialising in complex family law cases following the breakdown of a relationship. We are members of Resolution, an organisation of Family Law Solicitors that abide by a Code of Practice that promotes a non-confrontational approach to family law practice.

To find out more about financial dispute resolution and financial orders following divorce, please phone +44 (0)20 3983 1818 or email contact@edwardsfamilylaw.co.uk. All enquiries are treated in the strictest confidence.

The meaning of “real need”, as interpreted by English courts in post-Radmacher divorce cases, is analysed by Joanna Blakelock and Kate Pooler, a partner and an associate solicitor at Edwards Family Law.

The Supreme Court case of Radmacher v Granatino [2010] 2 FLR 1900 still leads the pack for the validity of nuptial agreements. Upon divorce, the starting point is that all marital assets are shared equally, otherwise known as the “sharing principle”. Generally, the aim of a nuptial agreement is to “contract out” of the sharing principle and restrict financial claims on divorce to “needs-based” claims only.  

Suffice to say, the English court is not bound to uphold nuptial agreements as a “contract”. However, Radmacher established the presumption that the terms of a pre-nup will be upheld and approved by a court. It therefore falls to the party who does not want to be bound by the agreement to argue why its terms should not be followed.

So, what is “real need”?

Radmacher decided that if a nuptial agreement left a former spouse in a “predicament of real need” then it would probably be unfair to hold the parties to that agreement. “Real need” was interpreted at a very low level in Radmacher and only required that a spouse was not left “destitute”.

Since Radmacher there has been relatively little guidance from the courts about the meaning of the phrase “predicament of real need” and where there has been guidance, judges have taken a range of views in this discretionary area.

One view: Fairness will not equate to near destitution…

In the 2016 case of WW v HW (Prenuptial agreement: Needs: Conduct), the couple’s pre-nup stated that neither party would have any claim to the other’s pre-marital, gifted or inherited property on divorce. Their relationship lasted 12 years and they had two children. The only joint asset was the former marital home which was worth GBP4.5 million, to which the wife had contributed 86% of the purchase price. The wife had inherited assets of circa GBP27 million.

“Radmacher requires the court to consider the pre-nup’s fairness in all the circumstances of the case at the time of the divorce.”

The judge made clear that the husband’s claim was limited to needs (on account of the pre-nup) but was concerned the husband would be left in a “predicament of real need” if the terms of the agreement were upheld.

The judge questioned whether the husband’s needs should be interpreted as “the minimum amount that is required to keep him from destitution” and whilst he judged that the presence of the pre-nup itself reduced the parameters of a needs award, this was not to the point of only saving the husband from destitution. He awarded him a housing fund of GBP1.7 million on a lifetime basis (with 45% of this sum reverting to the wife in 2027); a capitalised income fund of GBP215,000; and child maintenance payments of GBP18,000 per child, per annum.

Normal “reasonableness” considerations are still relevant

In the 2018 case of KA and MA (Prenuptial Agreement – Needs), the wife advanced a needs-based claim for GBP6 million (the pre-nup would have resulted in an award of only GBP1.6 million). In total, the judge awarded her GBP 2.95 million.

The judge said that Radmacher requires the court to consider the pre-nup’s fairness in all the circumstances of the case at the time of the divorce, which included the wife’s contributions to the marriage, the standard of living the family enjoyed, and which the husband (and the children whilst with him) would continue to enjoy. The judge was very careful to avoid too great a discrepancy between the children’s standard of living with each parent. These are the kind of “needs” considerations that would be taken into account in a divorce in the absence of a pre-nup. The judge awarded the wife a capitalised income fund for life at a rate of GBP100,000 a year (albeit with a 25% step down when the parties’ child reached the age of 21 or completed tertiary education). It is noted that she would have ordered GBP150,000 a year had the pre-nup not existed, demonstrating the role of a pre-nup in constraining a “needs based” claim.    

Another view: a nuptial agreement should not markedly reduce a normal “needs” assessment… 

In the more recent 2019 case of Ipekçi v McConnell another judge took another view. The couple had a pre-nup which, if upheld, would not have left the financially weaker party (the husband) “destitute” on divorce, but would have meant that his financial situation would be seriously strained.

The wife was an heiress with beneficial interests in trusts in the United States worth around USD65 million. The judge went beyond Radmacher, stating that he did not think that a valid pre-nup should result in a needs assessment that is “markedly less than needs assessed in ordinary circumstances. If you have reasonable needs which you cannot meet from your own resources, then you are in a predicament.” In any event, the judge deemed that the pre-nup fell short of compliance with the Radmacher principles and decided not to hold the couple to its terms. The husband was awarded a lump sum of GBP1,333,500.

The law is still uncertain; protect yourself

There remains uncertainty and inconsistency in the exercise of judicial discretion when it comes to the interpretation of Radmacher.

Nonetheless, if the effect of the proposed terms is designed to satisfy the financially weaker party’s housing and income needs, taking account of a reasonable standard of living, then the terms are likely to be considered “fair” and will be upheld by the court. Put another way, if the pre-nup inadequately provides for the financially weaker party, the agreement is unlikely to be worth the paper that it is written on and could lead to costly litigation, which undoes precisely the certainty that is initially sought. It is important to get the balance right.

Nuptial agreements certainly have a place in today’s family law climate, serving an important function of certainty and security for both parties. It is crucial to take early legal advice on the personal circumstances of individual cases. Enough time should be left for sufficient disclosure to be produced and shared, for adequate advice to be provided to the financially weaker party, and for negotiations to take place.