Courting disaster

By HELEN MONKS
Updated:

 

THEY say love is blind, but you ought not to be blinkered to the risks of going into business with your partner. Even star-crossed lovers should ensure they get some legal protection before mixing business with pleasure.

There is a belief that a legal framework exists for dividing of property and assets when unmarried couples split up.

But there is no such protection, say experts at Grant Thornton, and if you start a business with your unmarried partner they could run away with more than their fair share, or sell their interest in the business without your agreement.

Without the protection of a contract or shareholding, in the worst case scenario, one partner could end up with nothing.

Grant Thornton partner Toni Pincott says: 'There is no guarantee any fairness will come into play at a time when emotions are usually running high.

'Even if one of the parties in a married couple had not had anything to do with the business that the other party had developed for years, they might still be entitled to a proportion of it. An unmarried individual in the same position would not.'

Pincott says Shareholders' Agreements are a good idea for business partners whether married or not. If you don't fill out this undemanding document, you will have to untangle the share ownership and conditions of share sales at the point when things go wrong. This is likely to prove much more complicated and costly.

Depending on the size and complexity of your venture, drawing up an Agreement costs between £200 and £2,000. Small and relatively simple businesses are best advised to consult a local solicitor.

You can find some basic protection against your relationship breaking down at compactlaw.co.uk and fill in a Partnership Agreement for £35.

This can be used for up to four individuals entering into a business arrangement with a view to sharing profits. It makes provision for the partnership to continue even if a partner decides to leave at a later date and stipulates the remaining partners can purchase the outgoing partner's interest in the business.

As co-habitation continues to be the preferred option for many couples, it is imperative for unmarried individuals to know what their rights and risks are before heading into business.

Pincott says: 'Unfortunately love doesn't always last forever, and a little planning could spare a lot of acrimony and expense later.'

Compact Law's site also features a free-fact sheet on the general legal status and implications of co-habiting couples.

For more information on Grant Thorton go to its website.

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