Writing up a will? Planning or going through a divorce? Not sure how to treat your property and assets during this time of change? One of the most common inquiries we get from our readers is how to handle property and assets when it comes to divorce. While answers can be as unique as each family situation, there are some standard rules-of-thumb when it comes to dividing up the assets.
What are marital assets?
When a couple splits the assets that were acquired during the union must be divided between each person. Often we incorrectly assume that this means the higher-earning partner must pay support to the lower-earning spouse. While, this scenario is quite common, this division of assets is not solely based on earnings but rather on the couple’s overall marital assets.
A marital asset is any property (or asset) that was acquired during the marriage. So, you’re $100,000 in stock earnings would be a marital asset; as would your primary home; and your car, your chequing account, as well as your 60-inch TV and sofa. As long as you acquired the asset while you were married it becomes part of the equation when splitting up the assets.
Exclusions to marital assets
Of course, there are exceptions to what the law considers a marital asset. For instance:
→ gifts, inheritances or trust money is not part of the marital assets (unless used for the benefit of the family during the marriage, such as a downpayment on a home)
→ an insurance settlement is not part of the marital assets (unless used for the benefit of the family during the marriage, such as a downpayment on a home)
→ insurance proceeds are not part of the marital assets (unless used for the benefit of the family during the marriage, such as a downpayment on a home)
→ business assets (although exceptions can be made if a spouse has made significant contributions)
→ property that’s been exempted under a marriage contract or separation agreement
→ property acquired after separation
The matrimonial home
The only other exception is the matrimonial home. Under provincial laws, a matrimonial home is the property a couple shares during their married life. This is relatively simple to determine if you purchased a property together, as a married couple. But what if your spouse moved into a home you already owned? What if only one name is on the deed to the property?
According to provincial family law: It doesn’t matter. The marital home is any property that was shared regularly during the marriage—and it isn’t isolated to your primary residence or to just one property, explains Barry Corbin, a Toronto-based estates lawyer. “Family law and income tax law are different,” explains Corbin, “so there can be more than one matrimonial home.”
Common-law vs. legally married
But the rules change again if you and your spouse aren’t legally married. As a common-law couple, no one is entitled to equalization payments—payments made from one spouse to another to create an equal division of the assets. Also, person not on title isn’t entitled to a portion of the property, although s/he can make a claim for reimbursement of direct or indirect contributions s/he made to the property during the common-law years. (These are known as trust claims.)
Of course, there are exemptions and special circumstances to every story and situation so it’s best to seek out the advice of a family lawyer.
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