There’s so much to deal with in a divorce. When it’s about finance, the real question is, ‘who gets what?’ How will the property be divided among two parties? And also what laws say about it.
Let’s find the answers to all these questions in this blog. You will find everything about how to split assets in a divorce in Canada.
Let’s get started.
Split Assets in a Divorce in Canada
Marriage is always an equal partnership between two people. A spouse taking care of the house and another spouse earning for the family have equal contributions. Therefore, it’s very important to divide the properties equally when a marriage fails.
According to the Canadian divorce law, you need to split all assets you acquire while getting married and separated. You can keep the assets that you brought while getting married. However, you have to split if you increase the asset when you’re married.
What Can You Split in a Divorce?
When a marriage ends, there are many things that are necessary to split. It includes car, furniture, pension, home, business, money, etc.
Besides, you can own properties before getting married. So, as mentioned, you need to divide any additional value to those assets. Such situations could also include family homes.
However, there are cases where the family home’s full value needs to be split, like:
- Owning the house before getting married
- Getting the home as a gift
- Owning the house as an inheritance.
Many couples decide to go to court to know the amount percentage. So, either you should wait for 2 years after divorce or 6 years after separation.
Additionally, many couples agree to divide their property in a separation agreement. But make sure to hire a lawyer before signing the agreement. A lawyer would understand these legal rules and regulations.
What are Some Exceptions to Split Assets in a Divorce?
You can get some exceptions to split assets in a divorce. In these exceptions, one spouse can keep some property to themselves, generally known as ‘excluded property.’
Some of the excluded properties may include:
- During a marriage, you receive property as a gift or inherited from someone
- When someone died, you received money from the insurance company
- Personal injury cases where you received or have right on the money
- The property where a couple mutually agrees to keep as excluded properties.
In many situations, a housing property is used for many other reasons. For example, there is a family home and a farm on a huge property. So, you need to divide the home and some areas around the home.
How to Split Assets in a Divorce in Canada?
When you and your spouse separate, it’s necessary to divide the properties and debts equally. However, some couples tend to have different agreements made beforehand.
In case you have a different agreement, the two of you need to divide the debts and properties according to your way.
In rare cases, the court would take different decisions to split your assets. Sometimes, a 50-50 split can be unfair to one spouse. You can contact your lawyer if you want to know more about these.
How to Calculate What You Owe?
You can get confused about splitting your properties. Here is an overview to calculate what you owe your spouse.
Step One: property you owe – Deduct your debts and excluded properties
You can locate your property anywhere, including business, home, car, jewelry, furniture, savings, pensions, etc.
In many cases, you can get some joint properties. So, you should put half of those values. Make sure you keep out the excluded properties.
You should also include your debts like:
- Credit cards loans
- Car loans
Step Two: Owned property value – debts value
First, you have to add your owned property value from when you were married. However, exclude your family home, even if it’s yours. As mentioned, you have to share your family home even if one owns it, inherited it, or it’s a gift.
Then, you have to deduct your debts from this value. In this part, you have to exclude your mortgages related to a family home.
Step Three: Step one – step two
Here, you have to subtract the value you got in step two from step one. The result would be the value of the joint property. When you have a negative result, the amount would be counted as ‘0.’
Step Four: Compare your values
Now, compare your and your spouse’s values. You have to subtract the higher value from the lower value and divide the value by 2. The final value has to be paid by the person who owns a higher amount. You can call this process ‘equalization payment.’
A marriage contract can help you and your spouse in many situations when your marriage is ending. This can include property rights in some situations. However, there’s a similar agreement for common-law partners, a cohabitation agreement.
These contracts or agreements provide proper terms in case a relationship or marriage ends, like:
- Child or spousal support you require to pay
- Dividing property in a separation or divorce
- Deciding who’ll move from the house.
But you should know that these legal documents don’t make decisions or parenting time. Also, make sure to sign these documents in the presence of a witness. The witness will also require to sign the papers.
However, once the papers are signed, it is possible to negotiate to make changes in the future. You have to take legal action to bring changes after you get separated or divorced.
You don’t have to split your property when you live with your partner. In a common-law relationship, you don’t have to split properties that you bring into a relationship. Some things, like household items, furniture, and properties, would belong to the registered person.
However, you can get a share of properties if you contribute while purchasing them. If your spouse disagrees, you can go to court to legally get them. Also, you can find a cohabitation agreement to set up your property rights beforehand.
These are everything about how to split assets in a divorce in Canada. You can choose to represent yourself in court. But it would be best to take the help of a lawyer. Also, it’s very important to get professional advice while working with these cases to avoid mistakes.