With a projected $18.3 trillion in wealth to be transferred globally by 2030, the “great wealth transfer” is expected to be largest intergenerational transfer of assets in history. Family businesses are at the heart of much of this wealth, making succession planning a critical focus for families preparing for this transition.
One major risk that can compromise a family business is divorce or the dissolution of a civil partnership. At The Family Law Company, we believe a postnuptial agreement can be an essential part of protecting your family business during succession planning. Specialist Divorce and Finance solicitor and Managing Director Rachel Buckley shares her thoughts.
What is a Postnuptial Agreement in terms of a Family Business?
A postnuptial agreement is a legal document created after a marriage or civil partnership. It outlines how assets, including business interests, will be divided in the event of a divorce.
While postnuptial agreements aren’t automatically legally binding, courts will generally uphold them if they are entered into freely and fairly, with both parties having independent legal advice.
Why family businesses might consider a Postnuptial Agreements
A postnuptial agreement provides protection by:
- Setting clear expectation about how business assets will be treated during a divorce, minimising uncertainty.
- It can help ensure the business remains within the family, safeguarding its legacy for future generations.
- Reducing the financial risks by outlining payment structures for any settlements, potentially preventing financial strain on the business.
What can a Postnuptial Agreement cover?
While a postnuptial agreement often focuses on business assets, it can also include:
- Land and property.
- Savings, investments, and shares.
- Pensions and other marital assets.
How to create a legally sound Postnuptial Agreement
For a postnuptial agreement to hold up in court, it must meet several key requirements:
- Each party must receive advice from separate solicitors to ensure they fully understand their rights and the terms of the agreement.
- Both parties must provide a complete and accurate account of their assets.
- The agreement must be entered into voluntarily, without pressure or coercion.
If your spouse or civil partner cannot afford legal advice, you can offer to pay for it, but their solicitor must act independently in their best interests.
Safeguarding your family business with a postnuptial agreement
How could a postnuptial agreement protect your family business? A postnuptial agreement is more than just a document—it’s a one of the tools that could protect your family business, preserve its legacy, and provide stability for the future. Whether you’re creating a succession plan or responding to a family request, The Family Law Company can help you navigate this process and discuss how a postnuptial agreement could benefit your family business and provide peace of mind for generations to come.
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