7 top tips for a CEO facing divorce

When you’re facing divorce as a CEO, it can be easy to assume that handling your divorce is much like dealing with any other business-related matter.

But this is a far cry from getting things right with your divorce. Yes, you may need to think strategically, but you will also need to know some key facts, for example, do you know the facts about prenups? And do you know what your ex-spouse is entitled to from your business if you divorce? Here are seven key tips if you’re ending your marriage as a CEO. 

#1 – Keep your cool 

If you’re a senior executive who also owns the business, you may be concerned that it will be at risk if you divorce. However, the courts generally set out to keep businesses running and with their owners, giving the other spouse a larger portion of other matrimonial assets. They are aware that your business is likely a main income source, potentially supporting other members of the family. Also, it’s not a fait accompli that your case will go to court, many divorcing spouses can reach a financial agreement once the business has been valued. 

#2 – Be prepared 

In financial settlements, both parties should be ready to disclose all financials. As CEO, you will need to disclose any financial awards, benefits packages, or stock options you receive, and whether or not any of these can be regarded as separate assets outside of the martial pot. A prenuptial agreement can help you specify assets you wish to retain ownership of ahead of a divorce. Seek a legal team who can help you with potential complexities such as RSUs (Restricted Stock Units) too. If you own the business, be prepared to disclose documents and financial information such as the company’s assets and liabilities like property or pensions.

#3 – Find a trusted valuation expert 

Again, if the business is yours, it will need to be independently valued, so it’s key to source an experienced forensic account or business broker, who you may choose to instruct jointly with your ex-spouse. In their analysis, they will assess share values, the sustainable income from the business, and what capital is available as part of the divorce settlement. Business valuers have different levels of optimism about your business’s finances so it’s important to appoint someone who can put you in the know when it comes to tax consequences of each option, for example. 

#4 – Consider a shareholder’s agreement 

Getting a shareholder’s agreement before or when you’re married helps clarify how assets should be split in a divorce and can give you confidence that your business is protected. However, typically, in financial settlements, if both parties have shares, they will be transferred to one or the other as most divorcing couples do not opt to run their business together once they have separated.

#5 – Be aware of new rules on transferring assets in a divorce 

If you are transferring shares of your business during your divorce, consider the date of transfer. This is because currently, the transfer of shares if completed in the same tax year, will create a Capital Gain s Tax liability for the person receiving the shares when they sell them. If a transfer occurs after the tax year when you separated, the person transferring will be liable to pay the CGT after the transfer. However, new CGT rules are coming into force as of 6th April 2023, when divorcing couples will have up to three years from when they separated to transfer any financial assets without CGT tax, so bear this in mind.  

#6 – Get a postnuptial agreement 

If you are married already, a postnuptial agreement with your spouse allows you to specify how all financial assets are designated in a divorce. The details within it must be fully agreed upon to be enforced. If it’s possible to agree on having one, although not legally binding, they are often upheld by the courts providing the details are fair and there was no coercion involved in either party signing it.  

#7 – Find the right legal representative  

As a CEO, you will likely receive other forms of compensation linked to the success of the business. Some of these are non-transferrable and can create complexity in your divorce, so you will need an expert who can help you retain the benefits of those assets. Find a legal professional with experience in handling cases with complex assets and remember that early on in divorce proceedings is important.

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