How to Split Assets in a Divorce in Canada

During most divorces, splitting the assets causes a great deal of anxiety. Many people fear they will go without anything or their ex-spouse will go with “everything.”

Canadian law aims to distribute the property as fairly as possible. But how can one split the assets? Relax, don’t worry.

In Canada, spouses share their assets and debts equally. But this does not always mean a 50/50 division of everything. When there are considerable assets or conflicts between the parties, the distribution of assets can be difficult and painful.

Nonetheless, couples can reach a  legal separation agreement by understanding legal concepts and considering several asset distribution options.

This article will review the legal requirements and methods for determining how to divide assets in a divorce in Canada.

What is Family Property?

Family property or marital assets are assets acquired after the date of marriage to the date of separation. Every asset acquired during this period is treated as family property as long as it existed on the day of separation, regardless of which spouse acquired it.

The property includes:

• Family house
• Bank accounts
• Business
• Investments
• Insurance Policies
• Family vehicle
• Personal property (furniture, jewelry, etc.)

What is Excluded Property?

Excluded property is any property you owned before marrying and moving in together. It means it is not family property. Therefore, if you want to get a divorce, you do not need to divide your worth equally. Also, there are other assets or inheritances that any one of the spouses owned before marriage.

But, if the property’s value rises while you are married, the increase becomes a portion of the family estate. If you separate, the spouse with the higher value will be split evenly between you.

How Assets Split in a Divorce?

When separating, who gets what in the divorce is one of the most frequent questions people ask. It involves you should split your debts and assets and taking out everything that is not joint property. Anything you need to know about property division is provided here.

• The spouse who has a high income will pay the other spouse.
• Assets are divided equally between spouses.
• The asset is divided through a net family property (NFP) calculation.
• Pensions are included in the NFP calculation.
• Inheritances do not fall under the division of property.

To determine the NFP calculation, both partners must fill out the form. The form requests that you add up all of your assets and deduct the debt from the total.

The next step is for both spouses to determine the net assets in your name before getting married. Unless you arrange it differently, the value of these assets remains with you at the dissolution of the marriage. Hence, from your NFP, you deduct this figure for the marriage date.

The NFP calculation may differ for both if one has a higher income than the other. That’s where equality comes in. For instance, if one partner has an NFP worth $100,000 and another has an NFP of $30,000, then the difference in NFP is $70,000.

The partner with a higher NFP will pay $35,000 to the other partner. If you have over $1 million in assets, you’ll need an experienced high-net-worth divorce lawyer who can handle intricate financial situations carefully.

How Debts Divide in a Divorce?

The court law commands that if you and your spouse divorce, all marital assets and debts must be split unless you come to an alternative arrangement.

If you and your spouse have a property and debt division agreement, you will split everything according to how you specified in the agreement. It includes loans, income tax, mortgages, and repair costs.

How Much Does a Wife Get a Pension from a Husband?

According to the law, pensions acquired during the marriage should be counted as property. These must be taken into account while calculating NFP. Pension distribution is a complicated process. Try to consult with your lawyer to learn the outcome of your situation.

You should calculate your pension from the date of marriage to the date of separation. The rule is you have to live together for one year. You will likely have to offer your spouse some of your pension.

What are the Exceptions to Dividing Assets in a Divorce?

The equalization rule of dividing assets in a divorce has a few exceptions. The equalization payment may be changed by the court if:

• If one partner seeks to hide wealth.
• Before separation, one spouse spends more money on assets.
• Before separation, one spouse carelessly accumulates debt.
• While getting married, one partner makes up facts about their debts or assets.
• Less than five years of marriage might limit a spouse’s claim to mix non-marital property.

The only exception is that if you settle your divorce out of court, you are not required to establish an equalization plan. Remember that a judge has limited time to learn about your spouse and your financial situation.

How Much Time Need to Divide the Assets in a Divorce?

If you were married and received a divorce decree, you have two years to seek family property. Also, if you were a common-law partner, you have two years from the date of separation to share the assets.

Conclusion

In Canada, splitting assets in a divorce is a complex process. Both parties must disclose their assets and debts to establish a mutual separation agreement. Couples can obtain legal counsel from a divorce lawyer who can inform them of their legal rights and responsibilities.

In the end, spouses may reduce the stress and financial expenses of a divorce and go on with their lives by approaching the distribution of assets with collaboration.

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