Separating with a Business?

Separating spouses face additional complexity when a family business is involved.

All separating couples must decide on three crucial issues:

1. How to parent their children.
2. What is needed for financial support.
3. How to divide their property.

The law provides parameters for resolving each of these issues. These parameters support a couple’s ability to reach their own agreement rather than outsourcing decision-making to a third party.

While the basic principles apply in all situations, outcomes remain unique because every family is unique.

Separating When a Business Is Involved

When a separating family owns a business, additional legal and financial considerations arise.

Family law “pierces the corporate veil” and requires the business to be valued and distributed in the same way as other family property.

Three Questions to Ask

1. What is important about the business? If the business is a primary or significant source of income, maintaining its viability will be critical for financial stability. If the business is intended as a legacy for future generations, creative preservation strategies may be required. The business may also be closely tied to one spouse’s professional identity.
2. What is the business worth? There are different ways to value a business. An asset-based valuation adds the fair market value of assets and subtracts liabilities. Another approach values the shares using an EBITDA method, which measures operating profitability.
3. How will the value be shared? In Saskatchewan, the law generally presumes equal sharing of family property. A resulting payment may be required to buy out one spouse’s interest.

Separation is difficult, and independent legal advice helps you understand how the law applies to your situation.

When a business is involved, obtaining legal, financial, and tax advice becomes even more important.

Get Advice Tailored to Your Situation

Panko Collaborative Law & Mediation understands the complexities involved in dividing family property when a business is part of the family assets.

Call 1.306.975.7151 to schedule a consultation and learn how the law applies to you.