“My husband’s business is worth at least $60 million. How can I make sure he’s not cheating me out of my fair share?”
A business owned by your husband is considered property, which is included in his personal net worth at both the date of your marriage (if applicable) and date you separated. You may ensure that you are getting your share by ensuring that the value assigned to his business interests has been calculated by an independent, professional business valuator with the proper credentials and expertise. In Canada, this means seeking out members of The Canadian Institute of Chartered Business Valuators, the governing body for business valuators.
Valuing a business is a complex matter and many aspects of the valuation need to be considered carefully to ensure a fair division of property on divorce. Gone are the days when the value of a business could be determined simply by looking at a balance sheet. The value of a business is dependent on many factors including what that business will earn in the future, whether the business is a small start-up, a developing business, a mid-sized business, or an established player, the risks it faces, the opportunities it may take advantage of to name only a few. The valuator’s role is to assess the company’s internal strengths and weaknesses while understanding its role in the industry in relation to other economic factors. And in matrimonial situations, we must also consider the various tax implications that may arise. In short, valuing a business is a complicated assignment.
Another important issue is whether you will be able to claim support for yourself or your children. Support will be based on your husband’s income. Determining the income he has that will be available for support is not a straightforward exercise and can be influenced by a number of factors, including the amount and timing of his withdrawals of income from the business, the extent to which he is able to expense personal items through his business (items like travel, meals and other entertainment, automobiles, and personal insurance, to name just a few).
Considerations like these and many others will require investigation and adjustment by Chartered Business Valuators with experience in the complicated issues surrounding support calculations in marital breakdowns. There are any number of ways that unscrupulous, self-employed spouses can try and hide their income and assets, or make it appear as though their earnings are substantially lower than they really are, thereby reducing the child and spousal support payments that are their obligation to provide. Seeking out experienced professionals to assist with these issues early on is key to ensuring you receive your fair share.
Gordon Krofchick, CA, CBV is President of Krofchick Valuation Partners and is a forensic accountant with over 30 years’ experience in working with issues that impact a matrimonial separation, divorce, or other complex financial and litigation issues.