Financial Advisor’s “Book of Business” is a Divisible Asset under Family Law

December 10th, 2015 by

By Michelle Stephenson

A recent decision of the Saskatchewan Court of Queen’s Bench, L.M.J. v. R.G.J., confirms that an individual spouse’s client list, or book of business, may be treated as an asset for the purposes of division of family property.

Briefly, the relevant facts of this case are as follows: R and L had been married for 27 years; they had four children. They had agreed that L would stay home to take care of the house, the children, and to help R with his investment work. L assisted R by planning client events, attending corporate functions, tracking R’s out of pocket expenses, and doing his data entry. Following the breakdown of their marriage, several issues were in dispute as to the division of property, including whether R’s book of business was family property and subject to division.

While R took the position that his client list was not an asset, on the basis that he was not entitled to sell it, the Court found otherwise. R’s income was substantially generated from the client list and goodwill he had built up over the past two decades in his position. There was nothing stopping R from attempting to take his clients with him, if he chose to leave his employer. Furthermore, R had treated his book of business as an asset in his estate, as he had included the proceeds to be raised from it in his will. As such, the book of business was clearly a valuable asset to R.

Additionally, it was found that both L and R had directly or indirectly contributed to the development of the client list over the course of their marriage.

For these reasons, R’s book of business, valued at approximately $1,600,000.00 was found to be family property and therefore subject to division.

This treatment of a book of business as an asset developed over the course of a marriage, and subject to division as family property, is consistent with the case-law that has developed in Ontario (see, for example, Dunn v. Dunn). A similar decision would likely have resulted, if the case taken place in this Province.

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