Six assets that can complicate valuation issues in equalization of net family property (Ontario)

Affluent couples (and even those less so) can have complex finances to which parties cannot easily assign a fair value.  The first step in the equalization of net family property (Ontario) is to assign a “fair value” to assets and liabilities. Such situations can involve in-depth valuation issues, financial analysis, professional guidance, and legal agreements that dramatically affect the equalization process.

Valuation issues in equalization of net family property can be further complicated when people underestimate or overlook assets that may be eligible for inclusion in the net family property analysis in Ontario..

Assets that can catch you off guard

Below are some assets that can create valuation challenges:

1. Digital assets, including cryptocurrency and monetized social media accounts: Parties often overlook valuable virtual properties or undervalue them because they seem less important than traditional assets.
2. Executive compensation packages, including perquisites, bonuses, and stock options: Executive compensation varies widely depending on the company’s performance. There can be issues with stock options vesting and bonuses that can complicate the valuation process.
3. Stocks, bonds, and other investments: Often, one spouse manages finances or is the active investor. This can leave the other person in the dark about what they have and how much those investments are worth.
4. Business holdings: There are several ways to address business valuation. And documents like prenuptial agreements (marriage contracts) can dictate what happens to some assets.
5. Memberships to country clubs, golf clubs, and gyms: Much of these items’ value is in their exclusivity. Thus, dividing them can be less about financial worth and more about status.
6. Collections: These can be difficult to appraise.  You need an expert.

There can also be various other complications in valuation and the calculation of net family property.

Collecting all the information

Valuing assets and liabilities is complicated and can require legal and expert financial guidance – especially when there is a lot at stake. Thus, parties must start with a clear, comprehensive picture of the assets and liabilities that may be subject to inclusion in the process.

To accomplish this, parties would be wise to collect all the pertinent paperwork that they can lay their hands on.  Forensic accountants and appraisers could very well be essential partners in the process.

While this process may seem overwhelming, taking the steps recommended here can be crucial to avoid valuation issues in equalization of net family property to secure a fair settlement.