What will happen to my business in a divorce?

Owning a business or being self employed is rewarding, but can add complexity to a couple’s financial situation. It’s important to that any self employed income or businesses are valued professionally and that other factors, such as tax or operating consequences are fully considered when negotiating a settlement.

Did you know?

A spouse is typically entitled to half of the value of the business that was generated throughout the relationship, even if they had no involvement in the business
Splitting business assets can trigger significant taxes when monetizing the value of the business
Because of the high degree of variability in self employment income, spousal and child support levels are often re-adjusted post-divorce

Useful resources

Divorce for Business Owners FAQ

Is my spouse entitled to a share of my business in a divorce?

Yes, a business is considered as part of the family assets, and as such is subject to the same rules as other assets, which must be divided evenly between the spouses. However, you can get a date of marriage deduction for the value of your business at the time that you got married. This value would be deducted from the amount that is split.

I’m in a common-law relationship, is my partner entitled to a share of my business?

No, in a common-law relationship assets, including businesses, are split based on ownership. However, the non-owning party could file a claim for a portion of the value if they made contributions to the business.

Does my spouse become a shareholder in my business after the divorce?

No, only the value of the business is split in a divorce, not the actual business itself.

I’m self-employed, how is my income and/or business valued?

In most situations, a certified business valuator is hired to determine self-employed income and business value for divorce purposes.

My spouse did not contribute to building my business, are they still entitled to a share of it?

Yes, a spouse's direct contribution to building the business or their capability to contribute to the business does not impact their financial right to a portion of the family assets, which includes any businesses owned by either spouse.