Ten years ago, you married the love of your life. The proposal was made according to the rules, the reception could have been featured in a magazine and you were perfectly happy until recently. Your spouse took care of most of the preparation and busy as you were with the details, consulting a notary to draft a marriage contract was forgotten. No big deal, you think, since the partnership of acquests legal regime will apply to a separation which, of course, was not planned.
However, now, your relationship has become unbearable. You consult your lawyer and realize that you now need to give half of everything you acquired during your marriage to your ex-spouse, because of the partnership of acquests. No big deal, do you repeat, since your house and the cottage were acquired in co-ownership and each of you has their own car anyway.
You are a business owner? This is where it gets complicated!
While talking with your lawyer, you proudly declare that you are the owner of the corporation you bought 5 years ago through a new corporation of which you are the sole shareholder. You add that your new corporation got a loan from a financial institution and that you used your savings to invest. The shares issued by the corporation on the day before the assets were acquired were paid for one hundred dollars ($100). Half of the loan is now paid off.
Well, know that half of the net value of your corporation will have to be given to your spouse in the case of a divorce.
The mere fact of having bought the shares for one hundred dollars ($100) with money coming from the salary gained after your wedding means that the shares are considered acquests, which are shared in half with your ex-spouse. If your corporation has a net value of $400,000, you owe them $200,000.
During the creation of a corporation, if the initial $100 investment had come from a gift from a parent or from an investment account in your name that you held before the wedding, they would be considered private property and half of them would not be given to your ex-spouse during the divorce. Even better, if a regime had been chosen before the wedding, by means of a notarized contract, you would not have to transfer half of your business to your ex-spouse during the divorce.
So, buying a corporation without taking your spouse into account, is it really no big deal?
To better plan the consequences of a divorce on your business, contact one of our professionals in the Business Law sector.