Back in 1900, less than 15 divorces were granted in all of Canada. In 1968 the Divorce Act came into force. The number of divorces between 1968 and 1970 jumped by almost 200%.

With today’s Canadian divorce rate sitting around 38%, business owners must be aware because once the marriage is over, the business very often is too.

Should one partner decide to keep the business, they may have to buy out the other partner and make payments to the ex-spouse over time. This creates a continuous drain on income.

In cases where feuding spouses don’t agree, a judge may divide the business according to the information given. The founder of the business could end up with a minority share in the business even if he/she is the one to stay and manage it.

Is business ever the cause of divorce? Lawyer Paul Harvey says he can’t think of any of his cases where the business has been the cause of a divorce although he does not discount that different spending habits and economic management skills are a major cause of discord.

As far as protecting your business from divorce, it’s tricky. “Business assets are family assets if there has been a direct or indirect contribution by the non-owning spouse,” says Harvey. “For example: working in the business; allowing the use of family assets to acquire the business or to maintain the business; mortgaging the family home to acquire funds for the business; being a homemaker whilst the other spouse runs the business. If both parties agree that each spouse has an equal interest in the corporation a figure must be worked out to compensate the spouse who is not involved in the company.”

The best way to protect a business is to set things in place before the business and/or the marriage begins. “A pre-nuptial agreement or a cohabitation agreement can be used to protect a business or shares in a company, but they are subject to review for fairness by a Court,” explains Harvey. “Making the business a limited company or a corporation doesn’t necessarily protect it.”

All is not doom and gloom though; Harvey says he has seen situations where the business has been continued by the separated spouses because of good communication skills.

Jan Sutherland is a Kelowna-based family, individual and couple therapist with more than 15 years experience. She has seen many couples who are involved in business together.

“Working together puts an added strain on the relationship. It adds a whole other complexity to their lives. The ones that are able to do the best are the ones that can differentiate the business roles and divide responsibility in their business. When they divide them up based on their strengths – it works even better.”

She recalls a case where one couple decided he would be the management end of the business and his spouse would do the books. She tried it for six weeks – hated it and they decided to hire someone else. Although she left the company their marriage stayed together.

Sutherland has some great tips for those who work and play together. “Sometimes it works better if you work out of two locations. One works from a home office and the other from a location office,” she says. “That way you aren’t with each other 24/7”

Another aspect of the business/marriage partnership is avoiding the crossover between home and work. Sutherland explains, “It is very important that the business does not dominate every aspect of their lives. They eat, sleep and breathe business. It’s important to limit the business talk at home and I always suggest they hold business meetings outside of the home, even if it’s going out for coffee somewhere else.”

Sutherland has also worked with couples who dissolved the marriage but kept the business going. “They take a pragmatic view of their current relationship and the company and manage to set aside any negative feelings they might have for each other in order to move the business forward.”

The bottom line is that couples with good communication skills will do well in business together. “I mostly see people who are prepared to work through these types of problems,” says Sutherland. “The majority of them are successful at working through difficulties. Sometimes this means hiring out certain roles rather than trying to do it all themselves.”

Sutherland says she’s seen a few instances where the only way to save a marriage is to stop working together. “It takes a lot of wisdom to be able to back off and realize things need to be done differently. They have to make the choice of the marriage or the business – because it becomes too difficult to do both.”

Another thing Sutherland recommends is creating boundaries. “Be very clear of the division of roles in the office as well as the home. Making a clear boundary between the two is very important.”

“It takes discipline to recognize that you treat your partner different at home than you would at work. At work you are aware of the value that person brings to the business. You keep emotion out of the work place as much as possible. Home is the place for affection and the discussion of intimate and emotional issues.”

Sutherland recommends creating something like a ‘Standard Operating Procedures Manual’, even for a couple run company. “Put in writing what each person is expected to do – how to resolve things that may arise. Get it down on paper – who is to do what – and then follow it.”

But for the business partners that can’t make the marriage work the best thing to do is bring in the CPAs, business and divorce lawyers to create an agreement, and present it to the judge for approval. At least then if things get out of hand the judge can decide.

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