One of the most common questions asked by divorcing couples is what happens to a family business when only one spouse has been directly involved in running it. For couples where one partner has stayed at home to care for children, manage the household or support the family in other ways, it can feel deeply unfair to be told that a business built during the marriage isn’t theirs simply because they never worked in it.
A stay-at-home spouse is not automatically excluded from benefiting from a business asset, even where they have had no day-to-day involvement. However, that does not mean they will always receive a share, nor does it mean they can insist on becoming a shareholder. Much depends on how and when the business was established, its structure, and the overall circumstances of the marriage.
This article explores the key legal issues, the situations in which a stay-at-home spouse is more or less likely to receive a share, and how the courts approach business assets on divorce.
The starting point: How family courts view marriage and assets
Divorce law is guided by the principle of fairness, as set out in section 25 of the Matrimonial Causes Act 1973. When deciding how assets should be divided, the court looks at a wide range of factors, including:
- The length of the marriage
- The ages of the parties
- Their earning capacities and future needs
- Contributions made by each spouse
- The standard of living during the marriage
- The welfare of any children
Crucially, contributions are not limited to financial ones, with the courts repeatedly confirming that caring for children, running the household and enabling the other spouse to focus on their career or business are contributions of equal value.
This principle is particularly important where one spouse has been a stay-at-home parent while the other has grown a business.
Does it matter that the stay-at-home spouse didn’t work in the business?
Family courts do not treat business ownership as a reward for direct labour alone. If a business was built up during the marriage, the court will often consider it a matrimonial asset, even if only one spouse worked in it.
A typical example might be:
- One spouse establishes a limited company five years into the marriage
- The other spouse leaves paid employment to care for children and manage the home
- The business grows substantially over the next decade
In this scenario, the court is likely to view the business growth as a joint endeavour, because the stay-at-home spouse’s role made it possible for the working spouse to devote their time and energy to the business.
The fact that the stay-at-home spouse never attended meetings, signed contracts or appeared on the company register does not automatically exclude them from sharing in its value.
When is a stay-at-home spouse more likely to receive a share?
There are several circumstances in which a stay-at-home spouse is more likely to benefit from a business on divorce:
- The business was built during the marriage: This is perhaps the most significant factor. Businesses started and grown during the marriage are often treated as matrimonial property, particularly in long marriages. Essentially, the longer the marriage, the stronger the argument that both spouses contributed to the business in different but equally valid ways.
- The business funded the family’s lifestyle: If the business income paid for the family home, holidays, school fees and everyday living expenses, it becomes harder to argue that the business should be ring-fenced as belonging to only one spouse.
- The stay-at-home spouse sacrificed their own career: Where one spouse gave up career progression or earning potential to support the family, courts are often sympathetic to the argument that they should share in the assets accumulated as a result of that sacrifice.
- There are dependent children: The presence of children often shifts the focus towards needs, particularly housing. If the business is the primary source of wealth, it may need to be taken into account to ensure suitable provision for the children and their main carer.
When might a stay-at-home spouse be less likely to receive a share?
There are also situations where a stay-at-home spouse may receive a smaller share, or even none at all, of a business asset.
- The business pre-dates the marriage: If the business was established long before the marriage and remained largely unchanged during it, the court may treat it as non-matrimonial property. However, even then, the income generated during the marriage may still be relevant, especially where needs must be met.
- Short marriages: In shorter marriages without children, courts are often less inclined to share business assets equally, particularly where one spouse brought the business into the marriage.
- Clear separation of finances: If the business has been carefully kept separate from family finances and has not funded the matrimonial lifestyle, this may reduce the likelihood of sharing its value.
Can a stay-at-home spouse insist on becoming a shareholder?
Family courts are generally reluctant to force ongoing financial or commercial relationships between former spouses, particularly where doing so could disrupt a business or create conflict.
Instead, courts typically prefer solutions such as:
- A lump sum payment reflecting the spouse’s entitlement
- The transfer of other assets (such as property) to offset the value of the business
- Ongoing spousal maintenance where appropriate
Becoming a shareholder may be considered in rare cases, but it is far from the norm, especially where the business relies heavily on the personal skill, reputation or relationships of the working spouse.
Does the business structure make a difference?
The legal structure of the business can influence how it is treated on divorce:
- Sole traders: These businesses are closely tied to the individual. While the spouse cannot own part of the business, its value, including goodwill, may still be taken into account when dividing assets.
- Limited companies: The court looks at the value of the shares owned by the spouse, rather than the company assets themselves. Valuing these shares can be complex, particularly where the business is not easily saleable.
- Partnerships: The partnership agreement is key. While a spouse cannot usually step into a partner’s shoes, the value of the partner’s interest may still form part of the matrimonial pot.
Valuation and practical difficulties
One of the biggest challenges in these types of cases is valuation. Many businesses cannot simply be sold to release funds, and courts are wary of orders that might destabilise a company or threaten employees’ livelihoods.
As a result, even where a stay-at-home spouse is entitled to benefit from the business, the outcome may be structured over time or balanced against other assets.
In many cases, the court distinguishes between:
- Sharing: dividing matrimonial assets fairly
- Needs: ensuring both parties, particularly children, are adequately provided for
A stay-at-home spouse may not receive an equal share of the business value, but may still receive provision to meet housing and income needs, even if that means the business owner retains ownership but makes payments over time.
The importance of legal advice
A stay-at-home spouse should not assume they have no claim simply because they were not involved in the business, just as a business-owning spouse should not assume the business is untouchable.
Early legal advice, proper disclosure and realistic negotiation are essential to reaching a fair outcome without unnecessary conflict.