Long hours spent slaving away when nobody’s watching, is often what’s required to make a business successful. If you’ve taken all the risks and invested all your time, you deserve to get the rewards. Sadly it doesn’t always work out like that, especially when it comes to divorce settlements.

Selling your business to raise cash, buying out your ex’s shares, shareholder disputes, boardroom disharmony and continuing to work the business with your ex, are some of the ways a divorce can affect your business. Ireland operates a no blame divorce system which usually means that all assets are on the table when it comes to splitting up.

It is wise to divorce proof your business from the beginning when relations are good, it can save the business in the long run, and makes it less risky for investors or other shareholders to have future proofed the company’s survival.  Below are some measures that can be taken to assist in divorce proofing your business. Always take tax and legal advice before you make changes and ideally before setting up the business.

  1. Ownership and control

Decide from the beginning who with own and control the business. Set up a corporate structure which appoints you as the main or 100% shareholder holding the preferential shares with full control and voting rights, so that you make all the final decisions if there is a dispute. If other shareholders such as your ex-spouse are shareholders, grant them non-controlling shares with no voting rights so that they cannot make decisions or takeover control of the company, which could jeopardise the company’s future if there is a bitter divorce dispute.  An Irish Limited company can now have just one director, previously you needed two persons, so it is possible to just appoint you as the official director and your spouse as a managing partner in the business, without making them a director. If they are already a director of the company, it is administratively easy to resign a director from the board, or consider changing the board of directors by using your controlling vote to remove your ex-spouse from the board.

  1. Termination Terms

Termination payments can often be paid tax free and are a good way to incentivise your spouse to leave quietly. If your ex-spouse was involved in the company as a shareholder, insert a buyout clause with favourable terms in the shareholder agreement, so that there is a process to follow if one shareholder wants to leave willingly. Keep a controlling vote, so that a final decision can be taken by you to remove them from the company if required, so that the businesses future is not jeopardised.

You can create a specific buy sell agreement for your spouse from the beginning, which can set out the buyout price in your ex’s shareholder agreement so that it is a relatively fixed cost to buy them out and it can prevent them from acquiring ownership.

  1. Pay yourself a good salary

Make hay while the sun shines and pay yourself a good salary and dividends every year.  Insert payment terms into your shareholder agreement from the beginning. When the business is doing well, pay yourself a good salary and don’t leave lots of cash reserves in the company, which can form part of the divorce settlement and increase the share valuation. You can set out payment terms and dividend policy in your contract and these terms should be revised if required. If you are the controlling shareholder with voting rights, you can make the changes more easily.  

Pay into your own private pension scheme held in your own name not in the company’s name so that you can keep it as a separate asset away from the company. A trust is an effective way to hold legal ownership of the assets away from your business, and can be considered for other assets.

  1. Share Valuation

Get a professional valuation of the shares in the company, so that you don’t overpay your ex-spouse in a buyout scenario. You can also take out insurance to assist with raising the cash to pay for the buyout.  Agree a payment term so that the shares can be bought out over a period of time, which will assist with cashflow.

  1. Trusts

Consider placing some of the company assets and/or shares in a trust, so that you are not the legal owner of these assets and they cannot be counted towards your wealth in a divorce settlement.

  1. Corporate Structure

Some company structures will have another company such as a holding or financing company in addition to the main trading company. A holding company can hold valuable assets away from the main company and protect them against creditors, law suits and away from the divorce. Assets such as investments, property, intellectual property rights, brands, cars, cash and shares, can be owned outside of the main trading company.

  1. Entrepreneurs Relief

Entrepreneur’s relief is a tax incentive which allows business owners to sell their businesses and pay 10% capital gains tax. A person can also qualify for retirement relief and therefore pay no capital gains tax on the disposal of the business assets and shares.  This may be an attractive option for older people nearing retirement.

  1. Retirement

Consider paying a tax free lump sum into your personal pension every year, so that you have built up a good reserve for retirement. Payments to a company pension scheme are more attractive and a top payment can be funded as part of a divorce settlement, even if you remain working in the company.


Keeping the business and personal assets separate, and recording the correct value of the business and its assets, can speed up the divorce process and reduce the impact of the divorce on the business.  It is recommended that every business keeps sound business books and records and accounts that reflect the business accurately. Tax and accounting advice should be sought if any business is involved in a divorce settlement to ensure that a fair deal is struck between all parties involved, and tax savings are optimised.