How to Understand Ontario’s Family Law Act: Implications for High Net Worth Couples

There are considerable challenges when the separating or divorcing couple have high net-worths plus one or both have high incomes. While no divorce is ever simple, high net-worth divorces are even more complex. If your case goes to court, the outcome may be far from certain and it therefore becomes imperative to position yourself to achieve the best possible negotiated settlement. But a court battle is a possibility.  Be prepared.  The Gene C. Colman Family Law Centre can help you prepare for and litigate if necessary a high net-worth divorce.

Asset Valuation Challenges in a High Net-Worth Divorce

Asset valuation is a key in a high net-worth divorce in Ontario:

• There may be numerous assets that are difficult to value. For example, there could be digital assets, stock options, bonus structures, etc.
• There may be a jointly owned business (and with that potential remedies under section 248(3) the Ontario Business Corporations Act). The challenge may then be how to value the business. Each spouse may have a different interest and motivation in how the business is valued and how future ownership should be structured.
• It might be advantageous to consider joint valuations of assets including businesses.
• It might be advantageous to consider retaining a “financial neutral” to both value and advise re how best to structure the family wealth post separation/divorce.

Tax Considerations

Let us not forget tax!  There are tax consequences when we are disposing of and/or dividing properties between the spouses. If certain property is sold or transferred, it may trigger a tax liability for one or both spouses. If the spouses “trade” properties, and one spouses receives the entirely of a certain asset with a built-in tax obligation and the other spouse receives a property with much less of that built in cost, we may be creating inequities.  We have to be conscious of tax implications.

Child and Spousal Support

There may also be difficulties in establishing the amount of child support and what each parent pays towards the “special and extraordinary” expenses (also called section 7 expenses) of the children. Across Canada, the starting point for Child support can be found in the standard tables in the Child Support Guidelines. However, judges have discretion when the payor earns more than $150,000. (Fair warning: In practice it generally has to be significantly more than 150k.)  You can see my more detailed blog post on this issue here.

Spousal support may also be a likelihood for a divorcing high-net worth couple. This topic attracts the application of the Spousal Support Advisory Guidelines. These Guidelines provide us with a range of options for spousal support calculations.  Again, the court may have more discretion to tailor the award based on the circumstances when the payor’s income exceeds $300,000.  For my blog post that discusses factors influencing spousal support decisions in high net worth divorces, click here.

Hiding Assets in the Divorce

I have written and spoken extensively about the obligation to fully disclose one’s assets, liabilities and income in family law cases.  I think that I am beginning to sound like a broken record (so the saying goes for those you who still remember record players).  The biggest issue that faces our firm is that our own clients just don’t wish to fully disclose.  Just as we are diligent in ensuring that the other side’s discloses all relevant documents, so too must our own clients.  With the documents on the table, lawyers for the two sides are able to negotiate a fair agreement.

If you suspect that your spouse is hiding assets, you may need to hire a forensic accountant to help you trace assets, so they can be properly accounted for and valued under Ontario family law.

To read some of what I have written for high net worth individuals, click here.

Contact a High Net Worth Ontario Family Law Lawyer Today

It is essential that you contact a lawyer early in the process, especially when there are valuable assets involved. Gene C. Colman has over four decades of practical experience helping people just like you. To schedule an in-depth consultation with a lawyer, you can send us a message online or call us today at 1-888-389-3099.