Isaac Hill – What Happens to a Business When a Marriage Ends? Lessons from Tyrell v. Tyrell. Published September 30, 2026.
When a marriage ends, dividing the family’s assets can become significantly more complicated when one spouse owns or operates a business. Determining whether the business constitutes family property, establishing its value, addressing the tax consequences of that valuation, and determining the business owner’s true income for support purposes can all become contentious issues.
The British Columbia Supreme Court’s decision in Tyrell v. Tyrell, 2025 BCSC 94, provides a useful example of how these issues can arise in the context of a long-term marriage.
The decision addresses several important questions concerning business valuation, property division, spousal support, and the determination of income where a spouse operates through a privately held corporation.
A 28-Year Marriage and a Family Business
The parties had been married for 28 years and had two children, both of whom were adults by the time the matter came before the Court.
During the marriage, the husband worked as an architect and operated David Tyrell Architect Inc. (“DTA”). The wife primarily remained at home during the marriage.
Following the breakdown of the relationship, the parties were unable to agree on a number of financial issues. Among other things, they disagreed about the value of the family property, the treatment of the husband’s corporation, and the wife’s entitlement to ongoing spousal support.
These disputes illustrate an important point for separating spouses: the financial consequences of a business can extend well beyond the question of who technically owns the shares.
Is a Privately Held Company Family Property?
Under British Columbia’s Family Law Act, family property generally includes property owned by either spouse at the date of separation, subject to the statutory exceptions and exclusions. Family debt is also subject to the legislative scheme governing its classification and division.
Where one spouse owns a corporation, the shares and the value associated with those shares may therefore become part of the property-division analysis.
In Tyrell, the husband took the position that DTA had little or no value. He also argued that, if the company did have value, it should be assessed as of the date of separation.
The wife took a different position. She maintained that the corporation had value that needed to be included in the property division and argued for a later valuation date.
The Court ultimately valued DTA at approximately $104,000. The wife’s resulting interest in that value was approximately $52,000.
The Court also required the wife to execute the company’s outstanding corporate year-end documentation from the date of separation until the point at which she surrendered her shares.
Why the Valuation of a Business Can Become Complicated
A privately held business cannot necessarily be valued simply by looking at the owner’s salary or the amount of money sitting in the corporate bank account.
Depending on the circumstances, a valuation may require consideration of the company’s assets, liabilities, revenue, profitability, historical performance, future prospects, industry conditions, and the role played by the business owner.
The appropriate valuation date can be equally important.
The value of a business may change considerably between separation and trial. A company may grow, decline, acquire assets, accumulate cash, incur debt, or experience changes in profitability during that period.
In Tyrell, the Court ultimately determined that the corporation should be valued based on the circumstances existing when the parties began separating their finances rather than simply relying on its value at trial.
The Court also recognized that tax consequences could affect the practical value of the corporate assets. The parties were encouraged to account for the taxes that could become payable in connection with the corporate funds when determining the appropriate equalization payment.
This is an important consideration when dividing business interests: a stated corporate value does not necessarily represent the amount of money a spouse would actually receive after taxes.
A Business Owner’s Tax Return Does Not Always Tell the Whole Story
One of the more significant aspects of Tyrell concerns the determination of the husband’s income for spousal support purposes.
A business owner’s income for tax purposes is not necessarily identical to the financial resources available to that person.
The Court therefore looked beyond the husband’s reported Line 150 income. It examined the financial circumstances of DTA and considered various corporate expenses that provided personal or other benefits to the husband.
Among the expenses considered were items such as meals, employee benefits, amortization, occupancy expenses, vehicle costs, and telephone expenses.
Certain amounts were added back when assessing the husband’s income for support purposes.
This is particularly important in family law cases involving incorporated professionals and business owners. A corporation may legitimately incur expenses that reduce taxable corporate income, but that does not automatically mean every expense should be ignored when determining the owner’s income for support.
The Court may examine the underlying financial records to determine the resources that are actually available to a spouse.
The Importance of Looking Behind the Corporate Structure
Business owners sometimes assume that their personal tax return provides the complete answer to the question of how much income they earn.
Family law courts are not necessarily limited to that figure.
Where appropriate, the Court can examine the financial affairs of a corporation and determine whether expenses, retained earnings, or other financial arrangements provide the business owner with resources that should be considered when assessing support.
This does not mean that every corporate expense will automatically be treated as personal income. Rather, it highlights the importance of understanding the distinction between accounting or tax treatment and the broader income analysis required under family law.
For both sides of a family law dispute, the corporation’s financial records may therefore be highly relevant.
What Can Spouses Learn From Tyrell v. Tyrell?
The decision provides several practical lessons for people dealing with a family law dispute involving a business.
1. Business ownership does not necessarily keep the business outside the property division
A corporation owned by one spouse may still have significant consequences for the division of family property. The fact that only one spouse worked in or owned the business does not, by itself, determine whether its value will be relevant to the property division.
2. The valuation date matters
The value of a business can change substantially over time. Determining the appropriate valuation date can therefore have a major financial impact.
The Family Law Act generally provides that family property and family debt are valued as of the date of the hearing, unless another date is appropriate because using the hearing date would be significantly unfair.
3. Professional valuation advice may be worthwhile
Valuing a privately held company can involve issues that are difficult to resolve through informal estimates.
A qualified business valuator with experience in family law matters can assess the company’s financial information and provide an independent opinion about its value.
4. Tax consequences should not be overlooked
The headline value of a corporate asset may not correspond to the amount ultimately available after tax.
Tax consequences can therefore be relevant when determining how an equalization payment should be structured.
5. Full financial disclosure is critical
Business-related family law disputes frequently require extensive financial information.
Relevant records may include corporate financial statements, tax returns, banking records, shareholder information, investment statements, loan documentation, and records concerning corporate expenses.
Incomplete disclosure can make an already complicated dispute considerably more difficult and may have consequences in the litigation.
6. Support income may be different from taxable income
For support purposes, the Court may examine the financial circumstances of a business rather than simply accepting the income reported on a personal tax return.
Business owners should be prepared to explain corporate expenses and other financial arrangements that may be relevant to the income analysis.
Conclusion
Tyrell v. Tyrell demonstrates why financial issues arising from the breakdown of a long-term marriage can become particularly complicated when one spouse operates a private corporation.
If you need help with a separation on a complex corporate matter, we would invite you to contact one of the many lawyers we have a Portside Law Corporation who would be able to assist you.
Disclaimer – By contacting Portside Law Corporation through email, phone or direct message does not establish an attorney-client relationship. An attorney-client relationship is formed once both parties agree in writing to such a relationship. The information found in this document is of general nature and is not intended to be legal advice. Please contact our office to speak further about any particular legal question you may have.