Division of Property with Self-Employed Individuals – How Businesses are Valuated

Division of Property with Self-Employed Individuals

How Businesses are Valuated

Married couples will divide their previously accumulated property when the marriage is over. Partners that are part of a business should divide the value of their shares.

One method to come up with the value of a business is to consider its worth to a third-party. In an incorporated business the equity in the physical assets, debts owing to creditors and expected earnings would all be taken into account when determining the value of the business. In Addition, most of the time individuals hire a valuator to consider a business’s worth.

The owner of a business must disclose every detail about the business to accurately value it. This includes providing:

  • Copies of financial statements
  • Tax returns
  • Bank account statements
  • Copies of cheques issued to the owner
  • Lastly, information about any benefits the business owner may have received

Following the valuation, it must be decided how to divide the value. One of the partners may still use cash to buy the other one out, they may transfer other property in the equal value of the business, or they may transfer over their shares in the company.

Equalization

In the Family Law Act, the equalization of net family properties under Divorce states:

The spouse who has the lesser net family property should receive 50% of the difference between them. In divorces, each partner gets to keep one-half of the property. Partners should consider which property they would rather have, in case of a divorce. Also, spouses can receive payments if they share property and businesses. 

You are not alone if you are going through a divorce or separation, we are here for you. Tailor Law Professional Corporation has lawyers that can help you with your legal needs. Please do not hesitate to contact us at 905-366-0202, or visit our website here.

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