Do you have a company or a joint business?
For years, the wife and her husband ran a successful family business, which accumulated assets, a reputation, and a regular and very satisfied clientele. The couple’s personal relationship ran aground and they decided to break up and get a divorce. The question is: What will they do with the joint company? How do you divide a business in such a case?
Broadly speaking, in the case of a divorce between spouses who run a joint business, two main rules can apply.
The first concerns couples who married after January 1974.. Law Financial Relations Between Spouses, 1973, is the law that will apply to these spouses, according to which if the parties have not concluded an agreement between them regulating their financial relations (Agreement Finance) The resource balancing arrangement enshrined in law will apply to them.
Division of a joint business according to the Financial Relations Law
According to this arrangement, upon the death of the spouse or in the event of DivorceEach spouse is entitled to half the value of all joint property they have accumulated together, including a family business they established.
Balancing the value of resources will be carried out by assessing the value of all of the couple’s assets, from which the debts arising from the assets must be deducted.
This way, the couple will assess the value of the family business and divide this value equally.
If the parties disagree regarding the valuation of the property and the division of the joint resources, the Rabbinical Court or Home Family Law, depending on the circumstances of the case, will be the body authorized to carry out the distribution.
The second option for dividing a company or business concerns all those couples who were married before 1974 to whom the rule of partnership applies, according to which the spouses can demand their share of the joint family business at any time, not necessarily upon the death of the spouse or divorce.
Moreover, unlike the resource balancing arrangement, the sharing rule applies to any property owned by one of the spouses, including assets that were not accumulated jointly.
Read more about: Arbitration in divorce proceedings
Court considerations when dividing a partnership
In many cases, divorced couples disagree about how their joint business should be divided, especially regarding the way the value of the property was assessed.
And indeed, there are situations in which one of the spouses wishes to continue to manage the joint business after the divorce and by law he is required to pay half of its value to his divorced spouse.
Against this background, the tribunals and courts are required to exercise the right of balance and determine the date of its execution and the conditions, including determining interest rates or payment in installments.
According to Section 6 of the Financial Relations Law, when the judicial body makes such a determination, it must consider the financial situation of each spouse and also take into account the best interests of their minor children.
This determination has several considerations, including the loss of the reasonable source of income for one of the spouses, the accumulation of their social rights, and harm to the continued functioning of the joint business or another workplace, depending on the circumstances of the case.
What joint assets can be balanced and divided?
We gave as an example the discussion of the procedure In the case of 5879/04, so-and-so v. so-and-so, the Supreme Court ruled that under certain circumstances, even personal reputation acquired by one of the spouses during the course of marriage will be divisible and taken into account in the framework of balancing the joint resources.
Thus, the court held that the fact that a wife allowed her husband to study and invest in his profession, a fact that gave him a personal reputation, should be taken into account in the context of balancing resources.
Therefore, in light of the above, it appears that any asset whose economic value can be assessed will be divisible within the framework of the divorce proceedings, a fact that requires the couple to seek close legal advice provided by Lawyer specializing in family law.
We emphasize that in many cases, as part of divorce proceedings, serious disagreements may arise between the spouses regarding the continued management of a business company, which may ultimately harm both parties.
If you have a company or business together and you have decided to get divorced, there is no real reason to harm the company, its good name and/or its customers. It makes no sense, even though the interpersonal relationship is about to come to an end.
We recommend that each spouse think a few steps ahead and remember that life goes on. It’s a shame to harm the source of income and there are always other ways: divide the company, sell it, or have one spouse continue to own and operate the company in exchange for payment.
There is great importance For consultation with a lawyer In this matter, before you choose any path or unnecessarily harm society.
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How do you divide a company or business run by a couple who have decided to divorce? Who will continue to run the business and who will give up their share? What does the law state and what is the position of the Family Court on this issue?
