Divorce - proof your business

Evaluating assets inside and outside the marriage

Before assets can be divided between a divorcing couple, the first step is to assess what assets are available and in scope for sharing.

Matrimonial assets are those that have built up during the marriage or are jointly owned - such as the martial home and pensions. Meanwhile, non-matrimonial assets are either acquired prior to marriage or after separation (but before divorce) or from outside of the marriage such as inheritance.

The distinction between matrimonial and non-matrimonial assets is an important one. When evaluating the division of assets between a divorcing couple, the court will apply what’s called ‘the sharing principle’ to matrimonial assets in the first instance.

Typically, the starting point is an equal division of assets. The court will then assess the needs of each party to determine what it believes to be a fair split, which may deviate from the initial 50-50 basis.

If your business is a non-matrimonial asset, it’s easier to protect during divorce. However, it’s not completely off limits. If the available matrimonial assets won’t sufficiently cover both spouses’ needs, the court can bring non-matrimonial assets into the equation for division.

Adam Maguire, Family Law Partner at Clarke Willmott LLP explains: “How businesses are treated in divorce is not clear cut. For example, one partner could enter the marriage with a business, making it non-matrimonial property at the time. However, if that business is then used to financially support the family during the marriage, while the non-business owner stayed at home to raise the children, the business could be ‘matrimonialised’ by the court. This would bring it into the marital assets, and the sharing principle would apply.”

Adam adds: “The length of the marriage is also important. I’d expect the sharing principle to be applied with less force for shorter marriages. Meanwhile, the longer the marriage, the more likely it is that what were originally non-matrimonial assets could be bought into what can be shared.”

Between June and August 2026, the government consulted on a number of planned reforms that could bring unmarried couples more in line with their married counterparts if introduced. The proposals include new rights for unmarried couples who separate. Providing they have lived together for at least three years – or have children together – they would have similar rights to divorcing couples, such as claims on property and pensions.  

Offsetting other assets against your business

A business owner may need to give their spouse a larger share of other assets to keep full ownership of their business in divorce. This is called offsetting. The marital home and pensions are popular assets to be offset against a business. Inheritance, investments, and cash can be included too.

Before offsetting arrangements are agreed, assets need to be valued. For a business, this can be a complicated and nuanced process.

Adam provides an example. “Say a couple have a £1 million pound house and a £1 million pound business. In theory, the solution that one party keeps the house and the other keeps the business, may seem straightforward.

“However, the valuation of a business is far more fragile than that of a house. Regardless of the valuation, the business could go under tomorrow, or in a month or a year. The challenge for the court is how to take account of this risk when deciding a fair split – which can impact the level of offsetting required.”

What you can do to protect your business

There is no guaranteed way to completely protect your business in divorce. The court system has discretion to decide how assets are split and can undo any planning that may have been put in place if it thinks it’s fair to do so.

However, there are layers of protection you can put in place to increase the likelihood you will be able to keep your stake in a business in the event of divorce.

Shareholder agreements

A shareholders’ agreement is a legally binding contract which explains the rights and responsibilities between shareholders of a business. If the agreement states shares can’t be transferred to other third parties, such as a spouse, these terms can protect a shareholder’s equity stake in the business when splitting assets in divorce.

Putting your business in a trust

A trust is a legal arrangement which sets out how money and assets held within it are managed. By putting your business in trust, you no longer own it. Instead, you – and others of your choosing - become beneficiaries who may 
withdraw income or shares of the business via the trust. There are different types of trusts in the UK with different rules and tax treatments.

Putting your business in trust, doesn’t necessarily mean it’s out of scope in the event of divorce. This will depend on many factors and there is no blanket rule which applies to all cases.

For example, if income from the business has been used to financially support the couple during the marriage, it’s likely to be considered as a financial resource. Furthermore, if your spouse is also a beneficiary of the trust, it will be harder to argue to the court that they shouldn’t receive their fair share.

Adam says: “Putting a business in a trust puts it that one step further out of reach of the court. But there are certain types of trust courts can undo in certain circumstances. The advice of a family lawyer can be essential when creating a trust to ensure it’s structured in the right way for your intended purpose.”

Pre-nuptial agreements

Pre-nuptial agreements (pre-nups) allow couples to agree ahead of marriage how they wish their finances and assets to be managed in the event of divorce. Currently, they aren’t automatically enforceable in the UK. However, they are generally followed by the court system, provided they have been prepared properly and the outcomes for both parties are fair.

In a pre-nup, couples can determine which assets are matrimonial and which are non-matrimonial. Therefore, business owners can use them to ringfence their business to prevent it from being subject to sharing upon divorce.

When preparing a pre-nup, both parties should fully disclose their assets and receive independent legal advice before signing the agreement.

Timing of the pre-nup also matters. It’s considered best practice for the agreement to be signed at least 28 days before the marriage begins. This deadline ensures both parties have had sufficient time to understand the terms they are agreeing to. It can also demonstrate that neither party has been misled or put under pressure to sign the agreement.

If a pre-nup is rushed through close to the wedding date, it is possible to follow up with a post-nuptial agreement (post-nup) on the same terms once married. Adhering to these criteria will strengthen your pre-nup agreement in the eyes of the law.

Adam highlights when these agreements can be particularly useful: “Often post-nups are put in place where a couple are going through a difficult spell in their relationship. They want to resolve their differences but also want security around their finances in case they end up divorcing.”

Similar to a Will, pre-nup and post-nup agreements are not a once and done. Typically, they should be reviewed every five years and upon personal and business-related milestones. Regularly updating your agreement ensures it remains relevant and continues to reflect your lifestyle, financial commitments, and business valuation over time.

Adam adds: “A pre-nup is not a cast iron guarantee. In divorce proceedings, nothing really is. However, it is the best protection available for your business. Keeping it up to date is absolutely crucial in maintaining its credibility. A prenup made decades ago with little to no upkeep is less likely to be upheld by the court.”

Adam Maguire is a Family Law Partner at Clarke Willmott LLP and specialises exclusively in financial remedy work on separation and divorce. He advises clients nationally and internationally on a range of financial remedy matters and the negotiation and drafting of pre-nuptial and post-nuptial agreements.

Trusts are not regulated by the Financial Conduct Authority.

Please note, advice in this area involves the referral to a service that is separate and distinct to those offered by St. James's Place.