When Family and Business Matters Collide
Are you getting married or living common-law? Maybe you’re on the other side of the relationship spectrum, and getting separated or divorced? If either you or your partner owns a business or part of one, there are some legal issues that you should know about.
Take for example a family business that you and your spouse built and own together, let’s say it’s a well-received restaurant in a trendy part of town. If you decide to separate, how will you keep the restaurant running smoothly when you reach a deadlock in negotiating your separation agreement because you can’t agree on who gets to keep the business?
An issue can also occur when you or your spouse own a minority interest in a family business such as a car dealership with other relatives. The problem becomes, how will shares in the business be valued for the purpose of dividing your property?
Another common issue involves determining actual available income from a business you or your spouse control for the purpose of child and/or spousal support obligations. If for example, your spouse owns an IT consulting company and pays him or herself a salary, it may not be a true reflection of the income available to him or her.
The takeaway is that what works for the Canada Revenue Agency or for accounting purposes may not work in a family law situation where support is an issue. The legal rules are different. If you or your spouse has an interest in a business, resolving these issues can be very complicated, and no matter how solid your relationship, you should have a cohabitation agreement, marriage contract, or shareholder agreement in place. Without one, the consequences can be devastating, both for you and your spouse, and for the business. A family lawyer who has experience with these issues can help you.
For more information, read a recent that provides a brief snap shot of corporate and commercial issues faced by spouses.