When parties separate, tensions are high with both parties making lifestyle adjustments, attempting to divide assets and often negotiating parenting arrangements. In the case where parties share business interests or are partners in business, this can lead to increased stress, where the business and therefore the spouses current and future financial security remains entwined with a soon to be ex-spouse’s. In the case of Danecker v. Danecker, 2013 ONSC 1605, the husband and wife were both physiotherapists. Their marriage ultimately broke down in late 2009 and at the date of separation, they were equal partners in an unincorporated physiotherapy clinic. The husband attempted, without success, to set up his own separate clinic but eventually was employed by a local hospital. Upon the separation, the wife bought out the husband’s share of the building and continued to operate for three years without any profits being shared with the husband. As part … Read More
Divorce: How are business assets split?
When parties separate, there are often disputes over one party’s entitlement to the other party’s shares or interest in a private or family business. If a marriage contract was executed validly, this contract may govern the splitting of business assets. Where there is no marriage contract, there is no specific method of valuating a business under the Family Law Act and parties should always be aware that different methods can result in different values with different tax consequences. Parties often hire two separate valuators and if both parties cannot agree, the issue will end up in the Family Courts. Entitlement to a share of the business Whilst a family business which has been inherited or gifted to one party may result in the business interest being exempted from matrimonial property, the value of a private business interest not inherited or gifted will fall presumptively into the category of matrimonial property … Read More