Murray Gottheil heads up Pallett Valo LLP's Business Law Practice and Family Business Law Group.
Living Together Unmarried - New Risks for Business Owners
Until recently, the law was clear that property equalization did not apply to married spouses who separated. There was an exception for a spouse who contributed directly to building the value of an asset owned by the other spouse. So, for example, if one unmarried spouse owned a farm or a business that the other spouse worked in, the other spouse might have claimed an ownership interest in it.
As a result of recent case-law, the law is now different. The exception has become much wider. An unmarried spouse who has never been involved in his or her spouse's business, but who contributes to the "family enterprise" (perhaps taking care of children and the house for example), may be entitled to claim an ownership interest in the business owned by the other spouse.
A business owner who is living with another person in a domestic relationship should consider whether he or she is willing to have this type of claim made by his or her spouse in the event of a separation. If not, consideration should be given to entering into a domestic contract to address this issue.
I appreciate the assistance of Anita Kain of Kain & Ball (Family Law Lawyers) in reviewing this bulletin.
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