How Are Business Interests Divided In Ontario Divorce?
Two people can accumulate significant real estate and personal property prior to getting married and during their marriage, so Canadian divorce laws include provisions on how to divide things up. Under the Ontario property division law, all real estate and personal property must be equally divided between spouses when the marriage is dissolved. Plus, if assets you owned before getting married increase in value during your marriage, the value of the increase must also be split equally.
With some types of property, such as bank accounts and vehicles, property division is relatively straightforward. There are also specific provisions regarding the marital home. However, one of the most challenging assets to address as part of the divorce process is ownership of a business. The same laws apply, but the nature of business interests makes your case extremely complex. A Mississauga property division lawyer will provide details, but some answers to frequently asked questions are also useful.
How is a business divided in Ontario divorce? According to property division laws, the timing of starting the business is key to splitting these interests in divorce. If one spouse launched the company before getting married, the other is entitled to half the value of any increase that occurs during the marriage. When the business is started while married, both spouses split the total value equally. This may even be the case when one spouse does not contribute to operations.
Can I address business interests by agreement? Yes, working out an agreement is a wise strategy for protecting your company. Before getting married, you can exclude the business from becoming part of net family property through a prenuptial agreement. If you start the company while married, it is important to execute a marital agreement to cover the business.
What are options for dealing with a business in divorce? Though the property division laws require an equal split of the business or its increase in value, doing so is a complex task for a business that is a going concern. Options include:
- One party may buy out the other, and the values are equalized in the property division process.
- Two ex-spouses can continue to be partners and operate the business despite the end of the marriage.
- The parties sell to a third party and the proceeds are distributed according to property division laws.
Will I need a business valuation? The parties will need to retain a financial expert to assess the company and determine its value, and there are different methods for doing business valuations. The information will be critical for a buy-out or sale to a third party.
Learn More from a Knowledgeable Mississauga, ON Property Division Lawyer
You will certainly have additional questions about business interests if you are going through divorce, and Zagazeta Garcia Lawyers LLP will provide the answers you need. To set up a no-cost consultation with a member of our team, please call 905-232-0398 or go online. Our office serves Mississauga, Brampton and the Peel Region, and we look forward to hearing from you.