Protecting Your Small Business Through Divorce

For many couples, a small business is more than a source of income — it’s a livelihood built through years of effort, risk, and teamwork. When separation occurs, questions quickly arise:

Who keeps the business?
How will it be valued?
Can it survive the divorce process?

At Wallen Family Law, we help small-business owners across Wollongong and NSW protect their hard work and plan a way forward — whether through mediation or, if necessary, litigation.

1. Understanding That a Business Is “Property” Under Family Law

Under the Family Law Act 1975, a business — whether run as a company, partnership, or sole trader — is considered property for the purpose of dividing assets. This means it must be:

• Identified

• Valued

• Included in the overall property pool

It doesn’t matter whose name it’s in or who has been appointed as director or shareholder. What matters is how the business was operated, who contributed to it, and the value of the business and income it derives.

2. The Importance of Accurate Valuation

A professional valuation is often essential. This may involve appointing an expert business valuer who considers:

• Assets (equipment, stock, goodwill, intellectual property)

• Liabilities and debts

• Income and cash flow

• Market conditions and industry factors

Getting the valuation right ensures negotiations or court proceedings are based on a clear, credible figure — not guesswork.

3. Protecting the Business During Mediation

Mediation is often the best first step. It allows you to resolve financial issues privately, efficiently, and with greater control. During mediation, we focus on:

• Keeping the business operational while negotiations occur

• Identifying whether one party will retain the business or if a buy-out is more appropriate

• Structuring settlement options that minimise tax and cash-flow disruption

If both parties are committed to a constructive approach, mediation can produce outcomes that protect the business and support financial fairness.

4. When Litigation Becomes Necessary

Sometimes, mediation fails — for example, where:

• There’s a dispute over the true value of the business

• One party withholds financial disclosure

• Trusts, companies, or related entities are used to conceal assets

• Emotions or control issues block compromise

In these cases, court intervention may be required to ensure full disclosure and a fair division.

The Court can make orders to:

• Compel financial disclosure or valuation

• Determine ownership or direct the sale of a business

• Allocate assets or shares between parties

• Protect company assets from misuse

While litigation is more formal and can take longer, it ensures accountability and enforceability — critical where transparency is lacking.

5. Steps to Safeguard Your Business Early

Even before formal proceedings begin, there are proactive steps you can take:

Maintain clear financial records — keep your business and personal finances separate.
Avoid transferring assets — sudden changes may draw ATO or Court scrutiny.
Communicate with staff and suppliers — maintain stability and confidentiality.
Get early advice — understanding your exposure helps prevent avoidable disputes.

6. Why Legal and Accounting Advice Must Work Together

Family law and tax law intersect heavily when a business is involved. That’s why we work closely with accountants, valuers, and financial advisors to ensure any settlement or court order considers:

• Division 7A issues

• Capital Gains Tax (CGT) rollover relief

• Stamp duty exemptions

• Ongoing operating viability

This multidisciplinary approach protects both your immediate position and your long-term business health.

Wallen Family Law — Family Law, Made Clear.

If you own a business and are facing separation, early legal advice is critical to protect your livelihood and achieve a fair outcome.
📍 Based in Wollongong, assisting clients across NSW.
💬 Book your free 15-minute consultation today to discuss how we can help safeguard your business.

This article provides general information only and should not be relied upon as legal advice. Every family law matter is unique and requires specific legal guidance. Always seek professional legal advice for your specific situation.