Please or to access all these features

Add post

Watch this thread

Save thread

Start a new thread

Flip thread

Hide thread

My feed

Active Unanswered threads

Getting started FAQ's

Unanswered threads Acronyms Talk guidelines

Hide shortcut buttons

Talk

Legal matters

Mumsnet has not checked the qualifications of anyone posting here. If you have any legal concerns we suggest you consult a solicitor.

Flip

1 2 3 4 5

Original poster

fair division of family assets

102 replies

YorkieBarn · 09/03/2022 20:35

Hello

I’m looking for some unbiased thoughts about what would be a fair division of a family business/ property.
My DH is one of 3 brothers who all worked in the family business as children/young adults.
One brother then took over running the business when their parents retired. It was always successful and is now even more so, there are
some stresses associated with the business but also lots of perks. DH and the other brother have worked hard in their jobs and no one is financially hard up, the brother running the business is now extremely well off.
In the past DH and brother have been partly bought out and there are now negotiations about about finalising the splitting of the business. At present DH and brother have both been paid out about 5% of the current value of the business.
Obviously everyone involved has their own views about this. Brother with the business says he works hard and deserves all/most of it. The others think this is unfair as they would have expected at least a 1/3rd share of the value of the business when parents retired with some adjustments for inflation etc.
Any thoughts...........?

OP posts:

LemonTT · 10/03/2022 08:13

Who legally owns the business?

EveryCloudIsGrey · 10/03/2022 11:09

I’d get legal advice.

There are a lot of things to consider. If the business had ceased when the parents retired was is actually sellable? What about the assets?
What was the value that your parents added?

Some businesses are not viable as ‘thirds’ . If the two brothers who were out of the business effectively walked away when the parents retired then the third brother would have had a lot of stress and responsibility.
It also sounds like the third brother has always worked for the business where as the other two brothers only did so only when they were very young.

I can’t see how the other two brothers would be eligible for ”at least a 1/3rd share of the value of the business when parents retired with some adjustments for inflation etc” Unless there is something in writing to say that.
What opportunities did the third brother give up by staying in the family business?
What is the set up if the business -partnership, limited liability partnership or limited company or whatever? What does the paperwork say?
What do the parents say?
There are way to many variables for anyone on Mumsnet to hazard a guess.

Original poster

YorkieBarn · 10/03/2022 11:12

It’s mostly owned by the brother who is running it and his wife, with 15% owned by FIL that will in due course be sold to owners of the business and the proceeds passed to DH/other brother.
The dispute is around the previous “buy outs” not being based on anything concrete, just the whims of FIL, and not really reflecting the value of the business.

OP posts:

Hoppinggreen · 10/03/2022 11:18

If the buy outs were done legally and properly then they are somewhat irrelevant. Presumably nobody was forced to sell?

EveryCloudIsGrey · 10/03/2022 11:33

The dispute is around the previous “buy outs” not being based on anything concrete, just the whims of FIL, and not really reflecting the value of the business

So did your husband and brother ever officially own part of the business? If the FIL owned the business then it’s not unreasonable for him to have decided how much to give your husband and brother when they left.

I think this is too complex for Mumsnet although I’d guess that expecting at least a third of the value when the parents retired is very unrealistic ( unless there is something in writing to say differently)

Original poster

YorkieBarn · 10/03/2022 11:52

Thanks for the replies, I’m not expecting any legal expertise as such, more different viewpoints as to what is “fair”.
DH/brother take the view that parental assets should be shared equally among their children - hence the idea that they were entitled to a 1/3 share of the business.
Obviously a 1/3 share of the current value would be wrong as BIL as has contributed to some of that value.
BIL was happy to take on running the business as it suited him to do so whereas the other 2 wanted to do different things.

OP posts:

Mylittlepixie · 10/03/2022 12:15

Fair is relative though isnt it? Sounds similat to my parents situation. My grandfather had a business and my uncle took over. The other 3 children have shares. When my grandfather signed over the company to his children he gave them 25% each. However, since only one son actually works there/runs the place he is the only one who has a say. So if the 3 other siblings wanted to sell, but the uncle who runs the company now doesnt, then it doesnt get sold.
This was all done properly with a lawyer and with the knowledge of all children.

Hoppinggreen · 10/03/2022 12:18

Well Fair isn’t the same as Legal
What do the brothers want to happen? Business owner just hand over some of the Business?
They can take whatever view they want on “parental assets” but squabbling over them before FIL is even dead is pretty distasteful

arethereanyleftatall · 10/03/2022 12:22

Fair to me would be....

Whatever the value of the business was when fil retired divided equally 3 ways.

Everything since then - 100% to the brother who's actually done the work.

arethereanyleftatall · 10/03/2022 12:27

Why does your dh and his brother think they should get 'at least' a third? I'm not understanding why they would get more than a third.

purpleboy · 10/03/2022 12:40

@arethereanyleftatall

Fair to me would be....

Whatever the value of the business was when fil retired divided equally 3 ways.

Everything since then - 100% to the brother who's actually done the work.

Yes agree with this, but minus the small payout the brothers got initially.

Landedonfeet · 10/03/2022 12:41

@YorkieBarn

Thanks for the replies, I’m not expecting any legal expertise as such, more different viewpoints as to what is “fair”. DH/brother take the view that parental assets should be shared equally among their children - hence the idea that they were entitled to a 1/3 share of the business. Obviously a 1/3 share of the current value would be wrong as BIL as has contributed to some of that value. BIL was happy to take on running the business as it suited him to do so whereas the other 2 wanted to do different things.

Can’t say if fair without knowing much much more detail

Original poster

YorkieBarn · 10/03/2022 13:34

Thanks again for the comments. It is effectively an inheritance type issue that is being resolved (hopefully) whilst Parents in law are still alive (they are fine with this).
DH is unhappy that BIL will end up with a multi million pound business whilst he has much less (we are still financially OK].
His point of view is that he has effectively had money tied up in the business that has helped to build the business whilst meaning that he hasn’t been able to make use of it.
This is based on the idea that parental assets should be shared equally between their children so a third ‘would have been his’, and the reason for wanting a bit more than a third of the business’s value at the point of BIL taking it over is to compensate for not being able to use the money for the last 20 years or so.
The plan is that BIL will buy out parents in law who will then pass the money on to DH and other brother but the difference of opinion is around how much things should be split along the all children are equal lines and how much extra BIL gets for running the business.
I want to support DH who is very upset emotionally by all of this but also think that parents in law should be able to divide things up as they wish.

OP posts:

arethereanyleftatall · 10/03/2022 13:40

Sorry, but I think your dh is being completely unreasonable here. I wouldn't be supporting him because his demands are outrageous. Yes, the bil has a multi million pounds business - because he's earned it!! With regards to being 'tied up' - your dh didn't want to take over the business when fil retired. That was his choice - presumably. So, the business would have been sold then. Your dh would only have got what it was worth then. If it's grown since then, that is thanks to, and only to, your bil.

titchy · 10/03/2022 13:45

Given that your FIL isn't actually dead it's a bit much for your dh to think 'his' assets have been tied up for the last 20 years. They're not his, they're his fathers.

I'm not sure though how the other brother owns 85% if it's FIL's business. Did FIL just give him that in return for running the business?

Quartz2208 · 10/03/2022 13:51

What is the current state of ownership - because you seem to have it down as 85% your BIL and 15% your FIL

Is it then that the business was sold by your FIL to your BIL at under market value - as will the remaining 15%?

But if he owns 85% then your DH has in effect no say over that?

Also over time presumably your BIL has paid for the business - the proceeds of which havent been spilt by a 1/3 but 50/50? So your DH has actually received money for 50% of the business. You say that it was under business value but maybe that was to balance out the fact he has never received any of the business without paying for it?

how much things should be split along the all children are equal lines and how much extra BIL gets for running the business

What are things - the remaining assets because presumably your BIL has paid out for the business

Viviennemary · 10/03/2022 13:52

I don't think the two who have their own jobs are entitled to any more than they already have. Why would they be.

arethereanyleftatall · 10/03/2022 14:00

@titchy

Given that your FIL isn't actually dead it's a bit much for your dh to think 'his' assets have been tied up for the last 20 years. They're not his, they're his fathers.

I'm not sure though how the other brother owns 85% if it's FIL's business. Did FIL just give him that in return for running the business?

This is a really good and pertinent point.

His share has only been 'tied up' if your fil would have split the money three ways between his children at the point of retirement, and taken none for himself. Would he have? It's surely highly unlikely. It was still his money. I would have spent it on cruises and enjoying my retirement.

Original poster

YorkieBarn · 10/03/2022 14:04

The business was given to BIL to run along with majority ownership of it, DH and other brother were given some money and some cars to partly pay them back for BIL getting most of the business. FIL still owns 15%.
If the business had been sold when PILs retired then all the brothers would have been equal and in due course would probably have inherited equally.
As it is BIL was given a majority share in an already successful business and other brothers have been given much less. It is this inequity that is getting to DH, admittedly he could also have stayed and shared in running the business.

OP posts:

arethereanyleftatall · 10/03/2022 14:08

'In due course would have inherited equally'
In due course.
There you go then.
'His' money hasn't been tied up, he wouldn't have had it yet. If at all, depending on what fil decides to do with it.

arethereanyleftatall · 10/03/2022 14:09

*decided

ancientgran · 10/03/2022 14:16

Your husband made his choice when he didn't want to stay in the business. I think getting 7.5% of a multi million pound business sounds pretty good.

Ask your husband what he'd have done to support his brother if the business had failed, would he have bailed him out?

Hoppinggreen · 10/03/2022 14:17

So you would have been happier if the Business had been sold when FIL retired rather than BIL make it a bigger success?
Bit dog in the manger really

Original poster

YorkieBarn · 10/03/2022 14:19

@Quartz2208
BIL was given the majority of the business and DH hasn’t had any share of the proceeds.
The amount DH received so far is probably less than a 1/3 share of its value at the time BIL took over.
FIL gets paid a dividend and has a very comfortable lifestyle including cruises

OP posts:

twinsetandpearl · 10/03/2022 14:21

One brother then took over running

And made it more successful? Then the other brothers have already benefited over and above what their share was initially worth under the management of their father. The brother running it should get the greater share

Flip

1 2 3 4 5