If you are a business professional in the throes of a divorce here in Ontario, you probably have valid concerns about how you can protect your practice and its assets from ownership claims by your soon-to-be ex. Below is some important information you may need to know.
In Ontario, a married couple’s assets are divided according to provisions of the Family Law Act. Some money may be excluded if it is an inheritance or gift from a third party, but Ontario law considers the funds to become community property if the funds were commingled with marital funds.
If your practice has an estimated worth $400,000 and you have $100,000 set aside as savings, which is equal to the sum your spouse has in savings, the courts could order the assets be equalized. This might mean that your spouse can be entitled to 50 percent of the difference in the net family assets, which in this hypothetical case would be $200,000.
This can be a nightmare scenario for business professionals. In these type of cases, it may be best to try to negotiate a settlement with your spouse that will leave your business intact. When the courts get involved, sensitive business information becomes public knowledge and the court’s decision can negatively impact business continuity and disrupt day-to-day operations.
Business professionals must choose the best solutions when dividing property during divorce. Building a successful business takes years, and seeing it come undone during a divorce is devastating. Your divorce lawyer can work to protect both your personal and business assets to make sure you emerge from your divorce as unscathed as possible.
Source: Chartered Professional Accountants Canada, “Protect your practice,” Nathalie Boutet, accessed July 22, 2016