Should I make my new wife part of my business?

I recently married and my wife and I want her to become involved and be part of my business. What issues should I consider, and how do I protect myself and the company in the event of divorce?

You need to consider the motivation for making your wife part of the business. Do you simply want the business to be a joint venture, or does she have specialist skills or knowledge within the industry?

Are you just intending to maximise your combined income based on tax rates or allowances?

Do you intend her to be a shareholder, a director or a salaried employee? Not involving your wife in the company does not prevent your shares in the company from being classed as a matrimonial asset in a divorce, but it can prevent other practical difficulties arising.

You need to do a risk analysis of the perceived benefits of your wife’s contribution to the business versus the complexity involved in extricating her from the company in the future. If you wish to make her a shareholder, you need to consider that there may be tax consequences of her shareholding later being relinquished.

If you wish her to be employed by the company, she will enjoy all the same employment law protection as any other employee. You need to consider whether you will retain sufficient control to ensure that the day to day management of the company is not jeopardised by an acrimonious divorce, and similarly that you are in a position to pass appropriate shareholders’ resolutions.

As a shareholder, she would remain legally entitled to dividend income. You would not be able to declare dividends for yourself only. To maximize the protection for both yourself and the company, you should consider a post-nuptial agreement. It would be advisable to do this in conjunction with entering into a shareholders’ agreement.

To be blunt try to avoid doing what she wants.