If you’re thinking about getting divorced and have accumulated more assets during your marriage than your spouse, now might be a good time to get divorced.

Let’s say you own a business that has grown nicely during the marriage. And, let’s say your spouse is employed outside of the business and doesn’t have an ownership interest in your business. When you decide to separate, the value of your business will be subject to equalization when you get divorced or negotiate an agreement. This means that its value on the date of separation will form part of your net worth (we call it net family property because it’s your net worth plus or minus certain legal exclusions and deductions- leave that stuff to the lawyers). Whoever has the greater net family property has to pay the other spouse 50% of the difference between their net family property and the other spouse’s net family property,  to EQUALIZE things financially.

The date that your business is valued becomes very important. Obviously, its value  will vary depending upon what a buyer will pay for it. And what a buyer will pay depends upon how the business is doing.

Usually, in a recession, business is down and that’s not good . . . unless you’re getting separated or divorced. A poor economy usually translates into a lower value for your company which means less value on your side of the ledger to equalize with your spouse. And, that’s a good thing for you. Not so good for your spouse unless he or she has a substantial asset on his or her side of the ledger that goes up and down with the economy, say like a stock portfolio or piece of real estate.

As you can now appreciate, timing is everything when it comes to Equalization.

Check out this article from The Toronto Star for more about Equalization and timing your divorce.

Helping you help yourself,