Can You Keep Your Successful Business in Your Separation or Divorce in Ontario When Your Ex-Spouse Owns Part of It?
If you’re looking for a simple way to deal with your business in your separation or divorce when your spouse owns a part of that business, you’ll have to give some serious thought to this issue!
Hi, my name is Thomas O’Malley. I’m an experienced family lawyer in Durham Region and the GTA.
When you are married and get separated in Ontario, you have to determine your net worth, that is, the value of your assets minus the total amount of your debts on the date of separation.
Your former spouse must also calculate their net worth on the date of separation.
Then, whichever spouse has a higher net worth must pay half of the difference to the spouse with the lower net worth to equalize the net worth of each spouse. This is called an equalization payment under Ontario family law.
When you and your spouse both own part of your business, both of you must put down the value of your portion of the business on your side of the financial ledger.
However, this does not mean that you automatically split the business as a result of your separation or divorce.
As a practical matter, you often cannot split a business into two parts to run as two separate businesses after a separation or divorce.
You and your ex-spouse must figure out what you want to do with your business when your marriage has ended.
You can try and continue to run the business with your ex-spouse after your separation. This often does not work well since you and your spouse most likely don’t get along well enough to run the business together.
In this situation, you probably need to get a business valuation to determine the true value of your business.
Then you or your spouse could decide to buy out the other spouse’s interest in the business. You might already have a buy-sell agreement in place which is triggered by your separation or marital breakdown.
You might have to sell the business if you and your spouse cannot agree on terms for one spouse to buy out the other spouse’s interest in the business.
This is not necessarily a great idea since your business most likely provides a solid stream of income for you and your children.
You must carefully consider your options in your separation or divorce when you have a business that both you and your spouse own.
Make sure you spend some time with your family lawyer discussing this very important issue in your separation or divorce.
If you have any questions about your separation, divorce or family law case and you would like our help, there’s a few ways to contact our office.
You can leave a message on my Facebook law office page, visit my website at www.canadiandivorcelegaladvice.com, or call me directly at 905-434-8837. We would be happy to speak to you.
Oh, by the way, did you know you can protect your family law rights and get essential information on settling your family law issues with your former spouse with the daily indispensable family law advice and tips at my FREE Facebook group?
Click here to find out more: Durham Region Separation and Divorce Legal Support Group
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