Vancouver Family Property Business Division lawyers need special knowledge to properly value the income generated by the family business as well as its value. It just makes good sense to hire a high net worth family lawyer with proven experience in:
- calculating the income the family business generates for spousal and child support rather than using the business owners personal tax return,
- valuing the family business itself including the multiple of earnings approach and asset and liability approach and even the liquidation approach;
- ensuring real estate and investments and other assets such as inventory are corrected to their current fair market value as opposed to their purchase value adjusted cost base which is often millions of dollars lower on a company financial statement;
- accounting for the future potential or challenges for the family business and who will retain the business or whether it will be sold; and
- the tax issues related to a family company;
so the family business is divided fairly. In today’s blog senior associate Tal Wolf explains the intricacies of family business valuation and property division.
Often the two main assets in a family law case are the family home and the family business. They are treated far differently for tax purposes by CRA. Vancouver Family Property Business Division lawyers know this and ensure tax planning and tax discounts are fairly allocated between the souses so no one gets stuck with an asset worth far less than they thought it was worth. Our Vancouver Family Property Business Division lawyers helped set a number of precedents concerning valuation and division of the family business. We also know how to put protections in before trial so business profits and worldwide family property does not go missing or get wasted. Check out our multimillion dollar wins where retraining orders were put in place on family businesses around the world.
Vancouver Family Property Business Division 1 877 602 9900
Our Vancouver Family Property Business Division lawyers know that the divorce process can post challenges potentially spanning the rest of your life. It’s normal if you have concerns about how things will unfold. These worries can be even more stressful for business owners. I you are contemplating ending your marriage soon and own a business, there’s a number of factors that you should consider. Call the Vancouver Divorce and family lawyers at MacLean Family Law’s Vancouver Office 1 877 602 9900 and you may learn that you have more choices than you think when it comes to keeping, and even protecting the viability and growth potential of your company.
Will I have to share my family business with my spouse during Vancouver Family Property Business Division? 1 877 602 9900
The current BC family law presumptively divides on a 50/50 basis any income, assets, and debts existing at the end of the relationship. There are special provisions allowing for the exclusion of some family property or equity from division, and dealing with valuation dates for purposes of a buy-out or otherwise. There also may be “unequal” division in the relatively narrow minority of cases where bad faith or unique “significant unfairness” are shown. But let’s be clear, “unfairness” does not mean where you think that because you were the primary (or even sole) operator/manager of the business, or because your spouse was not “good to you” (or to the overall finances) during the marriage, you shouldn’t have to share the business with your spouse. The fact is, divorce in BC is a no-fault system, and in the vast majority of cases Courts are loathe to look before the separation date and try to unwind or reconcile what the parties did in the pre-separation period.
In fact, under the old Family Relations Act, the spouse’s contributions to or involvement in the business were requisites to sharing – but no longer. The Family Law Act 2013 changes merged each party’s participation in the relationship with their presumed indirect contributions to the family assets including “your” business.
If you owned your business before marrying, or if your business cannot continue without your skillset, you will likely be able to maintain ownership of your business in a divorce. However, you also likely will need to buy your spouse out of 50% of the gain in value over the course of the relationship. Notional distributive taxes may apply to discount that value, but if the gain is large, especially in long marriage cases, it could be difficult or impossible for you to cut a cheque directly out of the business. Instead, your spouse would be looking to get value out of other assets such as the former matrimonial home. Vancouver Family Property Business Division lawyers warn you once again to understand a business with a value of $1 million before taxes is worth far less than a $1 million dollar family home.
If you inherited a family business from your parents, the business qualifies as excluded property. But likewise, the gain in value may be divisible with your spouse by compensation, and especially if they assisted you with running the business, or if you secured financing against family property, or otherwise contributed to the business’ success.
Unequal division can occur and different valuation dates may be used if one spouse grew a business beyong market conditions after separation or saved it from going under. Ask our Vancouver Family Property Business Division lawyers about these cases.
What can I do to protect my family business from the consequences of divorce When Vancouver Family Property Business Division Is An Issue?
A prenuptual agreement, called a marriage agreement in British Columbia, is the single best way to keep from having to share the value of your business in the event of a separation. For example, you can pre-determine whether your spouse would have any financial right or interest in your business, and/or define it entirely as your separate property. But this, of course, assumes you plan ahead of the marriage and go through the drafting process with your spouse-to-be and your respective lawyers.
Regardless of whether you have a marriage agreement, you should call the Divorce Business Division Lawyers at MacLean Family Law 1 877 602 9900 to consult an experienced professional as soon as possible. We will help you make more informed decisions about your business interests. We also can introduce you to alternative dispute resolution methods that can be used to have more control over the process and results of your divorce proceedings.
Is a good family law team important? 1 877 602 9900
One of our important functions as counsel will be to facilitate the engagement of experienced corporate and tax specialists who can advise you, and to assist in structuring and documenting buy-outs, liquidations, and other forms of business reorganization resulting either from divorce proceedings or negotiated settlements.
Vancouver Family Property Business Division –What about business value?
Oftentimes, the hottest dispute ends up being not whether the business is divisible, but the value of your company. Good legal counsel, therefore, requires a thorough understanding of the principles and legal framework for valuing a business. We have extensive experience working in tandem with qualified business and real estate appraisers in connection with buy-out negotiations and appraisal litigation. Read our blog on family business valuation click here.
MacLean Family Law has 40 years of experience representing clients in complex divorce cases with business interests at stake. We understand you have put tremendous time and effort into your business. You want to minimize exposure to divorce proceedings, or to optimize the outcome, and we can provide the guidance and support you need to accomplish this. Contact us today 1 877 602 9900 to schedule a one-on-one consultation and learn more.
Our firm has offices across Canada.