Factors to Consider When Divorcing with a Family Business

Whether you marry someone while already having your own business, or you and your spouse start to build a business together after you wed, businesses shared between married couples are very common in Ontario. When you run a family business, it often requires all hands on deck, especially between two spouses, and accounts for your income as a unit. When you approach divorce, a family business will typically complicate the division of assets. To ensure accuracy in your asset division, book a legal consultation with a family lawyer at Karrass Law. Our family lawyers are also experienced civil litigation lawyers, enabling us to better understand the nuances of your situation and allowing us to provide comprehensive advice.

How Can a Family Business Complicate Divorce?

On its own, divorce is a challenging process, but when a family business is involved, the complexities multiply. The intertwining of personal and professional lives can lead to intricate and often contentious issues that need to be addressed carefully. As you separate your life from your spouse, navigating the complex division of assets adds more stress. To manage the situation with greater ease and accuracy, book a consultation with Robert Karrass and the family lawyers at Karrass Law.
Here are some factors that may complicate the division of assets when you have a family business.

Spousal Roles in the Business

The roles that each spouse plays in the business also need to be considered. If one spouse is heavily involved in the day-to-day operations and the other is not, it can affect the division of assets and the future of the business. Your civil litigation lawyer can help determine fair compensation or buyout terms that reflect each spouse's contribution.

The Impact of Income from the Business

Divorce can have a significant impact on the income of both spouses, especially when a family business is involved. The business may represent the primary source of income, and its division can affect the financial stability of both parties. Ensuring a fair and equitable distribution is crucial to maintaining the standard of living for both individuals post-divorce.

Individual Contribution Recognition

Acknowledging each spouse's contribution to the business is important during divorce proceedings. Contributions can come in various forms, such as financial investment, management, labor, and support. Properly recognizing these contributions ensures that both parties receive fair compensation and acknowledgment for their efforts. When each spouse is treated as an employee on paper, their specific roles and responsibilities become clearer.
For example, if one spouse worked full-time managing the business while the other handled accounting and legal matters part-time, the compensation and division of assets should reflect these differences in time and effort. Furthermore, documenting these roles can help in identifying which spouse's contributions were more critical to the business's success, thereby influencing the division of the business during the divorce.
Additionally, if one spouse brought in a substantial initial investment or had critical industry contacts that significantly advanced the business, these contributions must be factored into the division process. A family lawyer in Toronto, with expertise in civil litigation, can assist in evaluating these contributions fairly and ensuring an equitable distribution.

Initial Ownership Considerations

The origins of the business also play a crucial role in its division during a divorce. If the business was initially owned by one spouse before the marriage, this can complicate asset division. A legal consultation with a family lawyer in Toronto can help determine how premarital ownership and contributions affect the division process, ensuring that all factors are considered in reaching a fair outcome.

Future Business Viability

When a couple that runs a business separates, it can put the viability of the business at risk as changes in the personal relationship trickle into the business. While some people choose to dissolve their business after separating, others want to see their business carry on but questions arise like who should be in control of operations. To keep things running as smoothly as possible, there must be clear boundaries and agreements on business roles and decision-making processes moving forward.

Protect Your Business Interests During Divorce with Karrass Law

The impact of a business on divorce can be quite complicated. To protect your business and your financial interests, choose a reputable family lawyer in Toronto to help guide your division of assets. At Karrass Law, our civil litigation lawyers and family lawyers have experience with complex division of assets. We will advocate for your best interests so you can get what you deserve and protect your business.

Contact Our Team Today.