My spouse (soon to be ex) is incorporated. I am a shareholder of that corporation. Much of the marital assets that we have are inside an investment portfolio/brokerage account in the name of my spouse’s corporation. My spouse and I have agreed (per law) that half of the investment portfolio is mine when we divorce. Cashing out half the investments to satisfy is going to be a big hit tax-wise. So I thought some of you here may have some ideas on the following.
My spouse will be the recipient of a sizeable legal case payout (cash) in mid-2021. That payout will be tax-free to my spouse. My understanding is that no "gift tax" in Canada and that any resident of Canada who receives a gift of any amount from almost any source (except from an employer) will not have to include this in their income. So what my spouse and I are considering is that instead of cashing out half the corporate investment account to settle matters with me that I will receive a gift in 2021 that will settle matters.
Do you see any problems with this idea - accounting/tax-wise or anything else I am missing?
Also, any ideas how to “secure” the amount I am owed/will get in 2021. Our one year separation will be up in early 2021, after which I guess either my spouse or I could apply for divorce (we are in Ontario). “Secure” both in terms of preventing my spouse from reneging on what we agreed and (to a lesser extent) secure upon my spouse’s death.
Thanks!
My spouse will be the recipient of a sizeable legal case payout (cash) in mid-2021. That payout will be tax-free to my spouse. My understanding is that no "gift tax" in Canada and that any resident of Canada who receives a gift of any amount from almost any source (except from an employer) will not have to include this in their income. So what my spouse and I are considering is that instead of cashing out half the corporate investment account to settle matters with me that I will receive a gift in 2021 that will settle matters.
Do you see any problems with this idea - accounting/tax-wise or anything else I am missing?
Also, any ideas how to “secure” the amount I am owed/will get in 2021. Our one year separation will be up in early 2021, after which I guess either my spouse or I could apply for divorce (we are in Ontario). “Secure” both in terms of preventing my spouse from reneging on what we agreed and (to a lesser extent) secure upon my spouse’s death.
Thanks!
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