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JGM
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 11125
Experience:  30 years as a practising solicitor.
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What financial impact divorce would have on me?

Resolved Question:

Hi, we got married in Scotland just over two years ago. We are still together and there's no talks of divorce yet but things are gradually going to a wrong direction. So from my point of view I would like to know in advance where I would stand in terms my financial situation if it comes to divorce. Below is a brief explanation of my current situation:

- We don't have a joint account.

- We live in a rented property.

- I have two properties under my name that I bought well before the marriage and that are being rented out. Would those properties be treated as a joint asset?

- I'm a business owner and I have a limited company where I'm 100% shareholder and my wife works for a company as an employee and gets a salary. She is also a full time student.

- There's ten of thousands of pounds in the company's bank account. Would that be treated as joint assets? Also, what about the estimated value of the company itself?

- In my own personal savings account I have tens of thousands that were paid to me by the company as dividends a year or so ago while we were married. Would this be treated as a joint asset?

Thanks.

David

Submitted: 1 year ago.
Category: Scots Law
Expert:  JGM replied 1 year ago.
Thank you for your question. I am a solicitor in Scotland.
Any property, heritable of moveable, acquired by you before the marriage is disregarded if you separate and divorce. Any property which is acquired during the marriage is shared equally.
The company is yours and was yours pre marriage. The general rule is that she would not be entitled to a share of the value although as she has worked in the business she may have an argument that she has contributed to the business and should have a share of it because of her efforts. More information would be needed about the standing of the company and her relationship to it both before and after the separation. Note that the amount in the company's bank account is relevant only insofar as it will have a bearing on the value of the company. It is the value of the company overall that may be taken into account, not how much money it has or indeed what debts it has.
Any money you have taken from the company and placed in a savings account would be treated as marital assets and liable to be shared irrespective of what account they were paid into.
I hope this helps. Please leave a positive response so that I am credited for my time.
Customer: replied 1 year ago.

Hi, thanks for your answer. Can you though clarify a few points.

- My wife works as an admin and book keeper for the business on part time basis as she does a college degree on a full time basis.

How likely she could be successful with the claim that her contributions to the business in a couple of years (business is running for 7 years) time are substantial enough to gt a share of it during the divorce?

- If the worst comes to the worst, in terms of company valuation, is it's Net Worth based on the actual Assets and Liability that would be taken into account? What about the hypothetical value if the business is sold?

- Regarding the cash dividend that I paid out to myself earlier in a year are being used for mutual things like holidays, etc. Also, I might decide to pay back the business loan I had from a friend earlier.

If it came to the divorce some time in the future, I'm assuming only the remaining amount, if any left, would be treated as marital asset?

- What in that case about any cash savings in my personal account, are they all treated as marital assets, no matter of the source of that income?

Thanks.

David

Expert:  JGM replied 1 year ago.
If she is only admin she would have little chance of that. The value of a company would be the share value and would be arrived at by a forensic accountant looking at past accounts, order book, reserves, debtors and creditors etc. Under no circumstances do you want to sell the company as that would transpose one asset into another. The hypothetical sale value would be based on a share value and as such would represent the value for matrimonial purposes. You are welcome to pay back a loan or use the money in any way you please. Remember it is what the matrimonial assets and liabilities are AT THE DATE OF SEPARATION which is relevant, not before or after.
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