Dear Vanessa,
My wife and I are separating after 20 years of marriage, and our biggest dispute is over my business.
I launched a packaging company before we married. It was very small at the time, but I have worked tirelessly to grow it. Today, the company employs 14 people, and my accountant estimates it could be worth about $2 million.
My wife has never worked in the business. She worked part-time and took on more of the parenting when our children were young, while I carried the financial risks of building the company.
She now believes the business should be included in our property settlement.
The difficulty is that I do not have $1 million in cash to pay her. Most of my wealth is tied up in the company.
I am 52, and the idea of taking on a huge loan is making me feel sick.
I want to reach a fair outcome, but how can someone who has never worked in my business have a claim over its value?
Money educator Vanessa Stoykov (pictured) examines Mark’s letter on her new vodcast, Money Dilemmas
Leading family law barrister Tahlia Ferrari (pictured) joins Vanessa to discuss the dilemma
Am I being unreasonable?
Mark
Dear Mark,
It is understandable that you are frightened. You have spent 20 years building a company, creating jobs and taking financial risks. Now you are worried that your divorce could put everything you have built in jeopardy.
However, there is an important distinction to understand. You may own and operate the business, but that does not automatically mean its entire value will be treated as yours alone when the marriage ends.
I recently discussed your circumstances with leading family law barrister Tahlia Ferrari on my new vodcast, Money Dilemmas.
Her advice should offer some reassurance.
Tahlia explained that there can be practical and creative ways to reach a divorce settlement without forcing a business to collapse.
“You don’t want to kill the goose that lays the golden egg,” she told me.
That is an important point. If the business fails, both of you could be worse off, including your wife.
One possible approach, Tahlia explained, is for you to retain the business while your wife receives a larger share of other assets, such as the family home or superannuation.
This does not mean you keep everything. It means assessing the complete financial position rather than automatically splitting each individual asset down the middle.
Tahlia also said she had never had a client lose their business as a result of family law proceedings. That is encouraging, although every case depends on its own facts.
There is another crucial issue to consider: your wife’s contribution to the marriage cannot be measured solely by her income.
Caring for children and running the household while you focused on growing the company are contributions the law recognises as well.
Your first practical step should be to obtain an independent valuation of the business, preferably from a valuer you and your wife both agree on. An accountant’s estimate may not account fully for liabilities and other factors that affect the company’s true value.
You also need to consider the cost of a prolonged legal battle.
Tahlia told me she has seen legal bills range from several thousand dollars to more than $700,000, depending on the complexity of the matter and the level of conflict.
That is money neither of you will ultimately keep.
What stayed with me most was Tahlia’s warning about making major decisions while emotions are at their peak.
“We need to set you up for the rest of your life, and this decision really matters,” she told me.
That is a message I wish everyone navigating a divorce would keep in mind.
It is easy to focus on what feels fair today, but the choices you make now may shape your financial security for decades.
My advice is to seek experienced legal guidance, understand the options available to you and pursue negotiation wherever possible instead of escalating the dispute.
You built a business, while your wife helped build and support a family. Both contributions deserve to be acknowledged.
I discuss Mark’s situation in greater detail with Tahlia on Money Dilemmas, including business valuations, settlement strategies and costly mistakes to avoid.
If you are considering divorce, or know someone who is, this is an important conversation to watch before making major financial decisions.
You can watch the full episode here.
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