Dividing intellectual property after a divorce is complicated. Even though these assets were your idea, any intellectual property you created...
Appraising your assets is a common step in every divorce. However, when you are an entrepreneur, you may not be sure how to balance your business and personal holdings.
Our blog examines the most common way to value a business, the available exclusions, and when it is time to seek legal advice.
The first step in balancing business valuations with personal assets is to determine net family property. In Canada, spouses get an equal share of the assets from the marriage, such as real estate, bank accounts, and any business interests.
The increase in the value of your business during your marriage is considered net family property, so it is essential to assess your interest in the company during a divorce. There are a few common ways to value a business, including the capitalized cash flow method. This commonly used technique estimates a company’s worth based on projected future earnings.
Hiring an expert to conduct your business valuation is essential when you and your spouse decide to divorce. This step is particularly important when the company has significant assets or your spouse decides to contest its value. An appraiser would review various factors, such as past and projected earnings and market position, to make a fair and impartial determination as to what the business is worth at the time of your divorce.
Personal assets you acquired before the marriage, such as an inheritance, are usually separate property in Canada. This means they are excluded from the country’s equal division laws. A prenuptial agreement that specifies exceptions may also factor into how the business interests are split, if at all, as long as the arrangement clearly states that your business interest is separate property.
Balancing business valuations and personal assets is confusing for many people. That is why you need to contact the knowledgeable legal team at The Riley Divorce & Family Law Firm with your questions. We are available 24 hours a day and are here for you when you need us.
Paul Riley Law Office
