When divorce is contemplated by either one or both spouses, often it is time to start thinking about the division of assets. This could include the matrimonial home, financial accounts, earnings accumulated during the marriage and as one might expect, retirement accounts also.
That said and unsurprisingly so, countless married couples who in addition, become business partners, do not anticipate a separation and as a result make no formal arrangements concerning their business should the unexpected happen. Unfortunately, the lack of forward-thinking from the onset can become incredibly problematic, and in some cases subjecting the business to stagnation, as the breakdown in communication and lack of mutual agreement occurs between the two parties.
So, what happens when you finally make the decision to divorce? - People often assume that divorce typically means all assets are divided equally, 50/50. Obviously, there are exceptions to this notion - for instance if a property is in joint names and owned by each party as joint tenants, then indisputably each is entitled to half of the property in question. However, a jointly owned business is somewhat more complex, as generally the resolution is rarely as straightforward as the previous example.
There are a number of scenarios to which can be presented to married business partners:
- Complete dissolution of the business and splitting the proceeds
- Continue to jointly manage the business
- An elected spouse keeps sole proprietorship of the business and purchases the remaining shares.
As you can imagine, this can be a tough decision to not only decide upon, but one that both parties should endeavour to ultimately agree on together. Less challenging if the separation is amicable, which is why at Devry Smith Frank LLP, we understand the need for a comforting experience and the importance in promoting a smooth transition.
Furthermore, the complexities don’t often halt there. – Outside the obligations to yourself, there are obligations to your employees, clients, suppliers, creditors and anyone else who may be considered a business shareholder. It is essential to seek guidance from experienced family and corporate legal professionals, who have extensive skills in helping to decipher both the family and business aspect, thus attaining a fair settlement for both parties. Your family lawyer will also be of assistance in improving your knowledge on your responsibilities and entitlements throughout the process.
If you are thinking about dissolving a marriage and a business partnership simultaneously and you are concerned about what will happen to your family business, talk to one of our family lawyers today in our Toronto office location.
For more information on how we can assist, please contact our office online or directly on (416) 449-1400 and schedule a consultation today.
“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”