For many couples navigating a family business divorce Queensland, the business is the most significant and complicated asset to deal with when a relationship ends. Whether it is a private company, a family trust structure, a partnership, or a sole trader operation built over decades, a business interest does not simply get left out of the property settlement conversation.
If you are facing separation and a business is involved, this article explains what the law requires, how businesses are valued, what happens to goodwill and shares, and why early legal advice is critical to protecting your position.
The Business Is Part of the Asset Pool
Under the Family Law Act 1975 (Cth), which applies to all Queensland residents, the Federal Circuit and Family Court of Australia has the power to make orders in relation to the property of the parties to a marriage or de-facto relationship and that includes business interests.
It does not matter whose name the business is in, or whether only one spouse was actively involved in running it. If the business was built, grown, or sustained during the marriage, it will almost certainly form part of the property pool to be divided.
This is true whether the business interest takes the form of:
- Shares in a private company
- A partnership interest
- Beneficiary or control rights under a family trust
- Goodwill and assets of a sole trader operation
- Units in a unit trust
Related reading: For a broader overview of how Queensland courts approach property settlement after a long marriage including superannuation, the family home and contributions, see our article: What Happens to Your Assets When a Long Marriage Ends in Queensland? |
How Is the Business Valued in a Family Business Divorce in Queensland?
Valuation is often the most contested part of any property settlement involving a business. The court will typically require an independent expert, usually a forensic accountant, to prepare a formal valuation report.
That report will examine:
- The net asset value of the business (what it owns minus what it owes)
- The maintainable earnings of the business and what a buyer would pay for those earnings
- Goodwill: both commercial goodwill attached to the business itself, and personal goodwill attached to the individual running it
- The intermingling of business and personal finances, which is common in owner-operated businesses
- Any related party transactions, loans, or distributions that may affect the picture
The distinction between commercial goodwill and personal goodwill is particularly important. Commercial goodwill, the value tied to the brand, customer relationships, systems and location, is generally treated as a matrimonial asset. Personal goodwill, the value that exists solely because of one individual’s reputation or skills, is more complex and may be treated differently.
Where there is a genuine dispute, the parties or the court may appoint a single expert, or hear evidence from competing experts and make its own finding.
What About Shareholders, Co-Directors and Other Interested Parties?
This is an aspect of business-related family law that many people do not anticipate. Where a business has shareholders, co-directors, business partners or other stakeholders, those individuals have their own rights, and a family law settlement cannot simply override them.
Before any transfer, buyout or restructure can proceed, a number of issues may need to be addressed:
- Shareholder agreements may impose restrictions on the transfer of shares, rights of pre-emption, or valuation methodologies that differ from those used in family law proceedings
- Partnership deeds may restrict the assignment of a partner’s interest without the consent of other partners
- Trust deeds may limit how beneficiary or appointor interests can be dealt with
- Co-directors or minority shareholders may need to be consulted or formally notified before certain transactions can occur
- Financiers or secured creditors may have rights over business assets that must be managed carefully
Identifying these issues early, and engaging with other stakeholders in the right way at the right time, is critical. Getting this wrong can delay settlement, expose you to claims from third parties, or create problems for the ongoing operation of the business.
Does the Business Have to Be Sold?
No. There is no rule that requires a business to be sold as part of a property settlement. In practice, outcomes vary considerably:
- One party buys out the other’s interest, often funded by adjusting other assets (such as the family home or superannuation) in the other party’s favour
- The business is transferred to one party as part of a broader settlement
- In some cases, parties continue to co-own the business after separation, though this is rarely advisable and tends to create ongoing conflict
- Where the business cannot practically be divided or transferred, a sale may be the most workable outcome
The right outcome depends on the nature of the business, who runs it day to day, the liquidity of the other assets available, and the parties’ ability to reach agreement. A well-structured negotiation, ideally before proceedings are commenced, gives both parties the best chance of an outcome that protects the business and their respective financial positions.
Family Trusts and Complex Structures
Many business-owning couples hold their interests through family trusts, holding companies, or self-managed superannuation funds. These structures, often put in place for legitimate tax and estate planning purposes, add a layer of complexity to property settlement.
The Family Court has broad powers to look through the legal form of ownership and consider the substance of the arrangement. Assets held in a family trust may still be treated as part of the matrimonial property pool if one or both spouses have effective control over the trust, or have benefited from it during the marriage.
Trust deeds, company constitutions, and shareholder agreements should all be reviewed at the earliest opportunity. The terms of these documents can significantly affect what is achievable in a settlement and how quickly it can be reached.
Reaching a Settlement Without Going to Court
Most matters involving business assets are resolved by agreement between the parties, without a judge making the final decision. This is almost always preferable, litigation is expensive, time-consuming, and uncertain in its outcome. It also exposes confidential business information to a formal court process.
A negotiated settlement, reached with the assistance of experienced family lawyers and, where necessary, a mediator, can produce a more commercially sensible outcome for both parties. Once agreement is reached, it should be formalised as either Consent Orders or a Binding Financial Agreement (BFA) to ensure it is legally binding and protects against future claims.
| Considering a BFA?
For couples who are still together but want to protect business interests going forward, a binding financial agreement may be an option. See: Protecting Assets Mid-Marriage: What Queenslanders Need to Know About Binding Financial Agreements. |
Time Limits
If you were married, you have twelve months from the date your divorce (not date of separation) is finalised to apply for a property settlement order. For de facto couples, the time limit is two years from the date of separation. Missing these deadlines can mean losing the right to apply altogether.
Given the complexity of business valuations and the time required to properly assess your position, it is important not to delay seeking advice.
Take the Next Step
Bennett Carroll Solicitors acts for business owners, directors, and high-net-worth individuals in complex family law matters across Queensland. We understand both the legal and commercial dimensions of separations involving business assets, and we handle all matters with complete discretion.
We have offices in Brisbane (Mt Gravatt and Stafford), on the Gold Coast (Mermaid Beach), and on the Sunshine Coast (Birtinya) as well as appointment only offices in Brisbane City (CBD) and Ipswich (CBD). We can also conduct your matter entirely electronically if that suits you better.
Contact us today for a confidential discussion on 1300 334 566, or submit a form below.
