Dear Vanessa,
My wife and I are separating after 20 years of marriage, and the biggest argument we’re having is over my business.
I started a packaging company before we married. It was tiny then, but I’ve worked hard to build it. Today I employ 14 people, and my accountant says it could be worth around $2million.
My wife has never worked in the business. She worked part-time and did more of the parenting when our children were young, but I took the financial risks.
Now she believes the business should be included in our property settlement.
The problem is I don’t have $1million sitting in the bank to pay her. Most of my wealth is tied up in the company.
I’m 52, and the thought of taking on a huge loan makes me feel sick.
I want to be fair, but how can someone who has never worked in my business have a claim on its value?
Money educator Vanessa Stoykov (pictured) discusses Mark’s letter on her new vodcast, Money Dilemmas
Leading family law barrister Tahlia Ferrari (pictured) discusses the dilemma with Vanessa
Am I being unreasonable?
Mark
Dear Mark,
I understand why you’re frightened. You’ve spent two decades building something, employing people and taking risks, and now you’re worried your divorce could destroy it.
But there’s something important to understand. Your business might be yours to run, but that doesn’t necessarily mean its value belongs entirely to you when your marriage ends.
I recently sat down with leading family law barrister Tahlia Ferrari for my new vodcast, Money Dilemmas, to explore your situation.
And what she told me should give you hope.
Tahlia explained there are often creative ways to structure a divorce settlement without destroying a business.
‘You don’t want to kill the goose that lays the golden egg,’ she told me.
And she’s right. If your business collapses, there’s a risk everyone loses, including your wife.
Instead, Tahlia explained that a settlement might involve you retaining the business while your wife receives a greater share of other assets, such as the family home or superannuation.
That doesn’t mean you keep everything. It means looking at the entire financial picture rather than dividing every asset in half.
Tahlia also told me she had never had a client lose their business because of a family law matter. That’s encouraging, although every situation is different.
There’s another important point. Your wife’s contribution to your marriage isn’t measured purely by the money she earned.
Raising children and managing a household while you built the business are contributions the law recognises too.
The first practical step is to get an independent business valuation, ideally with a valuer you both agree on. Your accountant’s estimate may not reflect the business’s value once liabilities and other factors are considered.
And then there’s the cost of fighting.
Tahlia told me she has seen legal fees ranging from a few thousand dollars to more than $700,000, depending on the complexity and conflict involved.
That’s money neither of you gets to keep.
What struck me most was her advice about making decisions when emotions are running high.
‘We need to set you up for the rest of your life, and this decision really matters,’ she told me.
That’s something I wish everyone going through a divorce would remember.
It’s easy to become consumed by what’s fair today, but your decisions now could affect your financial security for decades.
My advice is to get good legal advice, understand your options and try to negotiate rather than fight.
You built a business. Your wife helped build a family. Both deserve recognition.
I explore your dilemma in greater depth with Tahlia on Money Dilemmas, including business valuations, settlement options and expensive mistakes to avoid.
If you’re considering divorce, or know someone who is, this is an essential conversation to watch before making major financial decisions.
You can watch the full episode here.
You can subscribe to Vanessa’s free newsletter here.
