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In Medicine Hat, and elsewhere in Alberta, we have seen economic, political and even environmental challenges negatively impact our personal and business assets. These changes can add stress to your relationship with your spouse, your business partner and even your own physical health. Is preserving your wealth in times of uncertainty an important goal for you? A lawyer can help you reach this goal by ensuring you have legal documents to reduce risks of claims against your assets.
People in Medicine Hat may have three (or more) areas where asset protection is important: in their personal matters, in their company or partnership, and in their estate.
Are you entering a new relationship? Do you want to limit the exposure of your personal or business assets to claims if that relationship ends? A prenuptial or cohabitation agreement may protect those assets. There are certain cases where pre-nuptial agreements have been successfully challenged – for example where a spouse is pressured to sign the agreement a week before a wedding day or where assets are not fully disclosed. However, when properly drafted and signed, a pre-nuptial agreement can prevent the value of assets, and their increase in value, from being shared with a new spouse on the breakdown of a relationship.
Do you have a business set up as a partnership or company? A Unanimous Shareholders Agreement (USA) or Partnership Agreement, can set out what happens where a business partner dies, loses mental capacity, divorces, or there is a parting of the ways between business partners. A business can do the following in a USA or Partnership Agreement:
- set out a formula to determine the value of a business interest, which may save time and money if the business is sold or divided between shareholders;
- direct the timing of payments to a departing business partner, so the remaining business partner(s) can pay them out while also maintaining the business;
- prevent a spouse from gaining a control of the business on divorce from or upon the death of the business partner; and
- direct an arbitration or collaborative process to deal with disputes rather than going to court. These dispute resolution processes can be more favorable than the court process in many cases.
All of these things may help to preserve your wealth through this time of financial uncertainty.
Is it important to you that your estate assets be distributed according to your wishes when you die? Your Will facilitates the efficient distribution of your assets upon your death. Estate litigation can be expensive and take a lot of time. A lawyer can evaluate the potential risks of claimants against your estate and propose options to mitigate possible claims so your estate goes to where you intend it to. An Enduring Power of Attorney (EPA) will allow someone to handle your financial affairs when you lose mental capacity. You can name someone who can continue the operation of your business, look after you finances, and ensure you and your family have access to assets.
There is also significant interplay between these matters. If you enter a new personal relationship and later separate or start a divorce action, how will that impact your business or your estate plan? If your business partner develops physical or mental health issues, how will it impact the operation of your business? It is important to understand how challenges in one area may impact another area.
These documents need to be put in place well ahead of the risks they are designed to address. If you use the analogy of your physical health, this is preventative care, not emergency care. The Canadian Bar Association has developed Legal Heath Checklists which are a great starting point on a variety of personal and business issues. You can find the checklists at: http://www.cba.org/cba/equaljustice/resources/checklists.aspx
If you are interested in how preventative care can protect your assets, contact your lawyer for a legal risk assessment.