When news broke this week that Bill and Melinda Gates would be divorcing, most of the focus immediately shifted to the money. As the fourth-richest person in the world, Bill Gates is said to be worth over $130 billion. Given that, and considering the pair married well after his success as the co-founder of Microsoft, one might expect the pair to have an iron-clad, extremely detailed prenuptial agreement, or as they’re called in Canada, a marriage agreement, in place. But they did not.
Complicating matters even more, the Gates’ have three grown children, they share a massive charitable organization, The Bill and Melinda Gates Foundation, the largest private philanthropic foundation in the world. Given the lack of a contract between them, and so much at stake, should we expect a long and drawn-out courtroom battle as they settle their affairs? All signs point to no, considering the couple made it clear that they have already entered into a separation agreement.
Much of the difference between the two types of agreements relates to timing. A marriage agreement is something a couple enters into at the start of their marriage, in order to set terms relating to the division of property and other financial matters in the event of a future separation. Since this agreement is completed in advance, certain items cannot be included. For example, a couple cannot set terms with respect to parenting or child support matters in advance. These issues must be dealt with in whichever way best serves the child’s interest at the time it is relevant, and so the law does not allow a couple to set these terms years ahead of when they may be needed.
Secondly, a marriage agreement cannot mandate a particular method for dispute resolution. Again, this is something best decided based on the circumstances at the time it becomes relevant. It may be a problem if a contract mandates mediation when litigation is a couple’s best option at the time of separation or vice versa.
A separation agreement is a document married or common-law couples sign after they have decided to end the relationship. Since it is created at the time of separation, all issues requiring resolution can be included. This includes parenting time and decision-making ability with respect to the children of the marriage, as well as the form of dispute resolution, if necessary. However, since it occurs after separation, there is also a chance that the relationship between the parties may be strained, or even high-conflict, which can make the process more difficult.
No matter which type of agreement you sign, it’s important to make sure it is compliant with the law, otherwise, it could be deemed invalid, and therefore, tossed aside. There are a number of elements required to create a binding and enforceable domestic contract. This include:
Most people are not the co-founder of one of the largest tech companies in the world, nor do we oversee a major private philanthropic organization. However, any family business can complicate the issue of the division of property. The best way to protect both parties’ interests is to plan in advance using a domestic agreement, as outlined above. A skilled family lawyer will review the details of your business, the ownership structure, and help you to identify your options for managing the division of the business in the event of a separation.
A key aspect of equalizing the division of family property is knowing the value of each property at the time the relationship began, vs. the date of separation. The valuation of a business can be complex, and often requires the assistance of a qualified third-party business valuator. Different values can be attributed to a business based on the valuation method and type of business involved. For example, a longstanding professional corporation might derive its value largely from goodwill, whereas other businesses may hold most of their value in their assets and inventory.
At Mincher Koeman, our family lawyers are dedicated to providing trustworthy and insightful guidance to their entrepreneurial clients in complex separation and divorce matters. Our experience in asset valuation and financial matters allows us to act as a guide through the complicated process of selling or dividing a business. Further, we can assist with preventative planning measures through the creation of detailed and well-planned domestic agreements. Please contact our office to make an appointment to discuss your matter with one of our lawyers today by calling us at 403-910-3000 or by contacting us online.
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