Experience is vital to navigate complex financial matters
This article was originally published on AdvocateDaily.com (now closed down) on 2 October 2019. It is re-published in full below.
By Paul Russell, AdvocateDaily.com Contributor
When dealing with equalization in family law matters that involve complex assets, make sure the right people are involved, says Mississauga family lawyer Deepa Tailor.
“If there is a business or intricate finances in the equation, you need a family law lawyer — at the outset, not later — who has experience with these types of cases and can put together a financial record for the court,” says Tailor, managing director of Tailor Law Professional Corporation.
“Your family law lawyer will act as your advisor and will bring in an accountant or a business evaluator if needed, so you have a good sense of what the assets in question are worth,” she tells AdvocateDaily.com.
Tailor says a common situation that arises is when one spouse owns an enterprise, and the other is an employee. In that circumstance, she says the court will take into consideration that both parties are reliant on the business for their incomes, and the person who owns it cannot just claim it.
“More than likely, the other spouse assisted in building that company, often going that extra mile to ensure it succeeds,” she says. “Even if they stayed at home, their efforts allowed their partner to devote time to the business.”
While an equalization claim can’t be made with common-law couples in the same situation, since there’s no matrimonial property, Tailor says there is still an equivalent remedy.
“There is potentially a constructive trust claim there, since the common-law spouse probably contributed significantly to household expenses, or dedicated a lot of time to help build the business and acquire assets,” she says.
In a similar vein, Tailor says business owners who put the matrimonial home and other assets into their husband’s or wife’s name to avoid liability could regret that decision if the marriage ends in divorce.
“While there is some merit to that strategy in a business sense, it has now backfired, as all your assets are in the name of the other person,” she says.
If someone with sizable assets is getting married, they need to get advice upfront about how to protect themselves in case of divorce, through such vehicles as a marriage contract or prenuptial agreement, Tailor advises.
“Have the conversation with your partner, and draft the cohabitation agreement upfront, so that if the marriage fails, it doesn’t hurt you as badly,” she says.
Tailor says in many cases higher-income spouses try to hide assets or their savings if the marriage ends in divorce.
“That’s where the power of disclosure is going to be relevant,” she says. Mediation or other alternative dispute resolution methods aren’t viable options in this scenario, Tailor says, explaining “if one party is hiding assets, court is the only option.”