HOW DO WE DIVIDE OUR ASSETS, DEBTS AND PROPERTY AFTER A SEPARATION?

Division of Assets

In dividing property on separation, the first assumption is that people should have an equal share of property gained by the efforts of each partner. In most cases, contributions of a homemaker and an income-earner are treated the same. Some property is not equally divided. Exempt property includes property owned before marriage, gifts from someone other than your spouse, inherited property, and property which is the subject of a written agreement. But the amount any exempt property has increased in value since it was acquired may be shared equally between married spouses.

‘Matrimonial Property’ is all property acquired by spouses during the marriage. Generally, matrimonial property is divided equally between spouses when a marriage ends, unless the result would be unfair. Certain kinds of property acquired before the marriage may not be divided when a marriage ends. This is called ‘exempt property’. However, sometimes the increase in value of exempt property may be considered ‘matrimonial property’. Nonetheless, this increase in value may not automatically lead to an equal split. The Court will make a decision based on what is just and equitable.

Property which may be divided includes, but is not limited to:

  • The matrimonial home;
  • Household goods (this includes almost all personal property used by family members);
  • Business interests;
  • Investments, stocks, bonds;
  • R.R.S.P. and employment pensions;
  • Cars; and
  • Other property that has been purchased during the marriage or brought into the matrimonial relationship, or used for the mutual benefit of the spouses.

Property which may not be divided includes:

  • Property acquired by one spouse before the marriage;
  • Property one spouse received as a gift;
  • Property one spouse received by inheritance;
  • An award or settlement for damages in tort law in favour of one spouse (i.e. money paid for pain and suffering in an automobile accident) unless the award was meant to compensate both spouses.

No claim by the other spouse can be made on the property listed above, unless it has been brought into the marriage. An example of this would be taking a home purchased by one spouse before the marriage and putting it under both spouse’s names.

Division of Pensions

Pensions are considered property under the Matrimonial Property Act. There are two types of pensions: private pensions (by employment) and the Canada Pension Plan. Certain pensions may have legislation that determines how the pension will be divided when a marriage ends. Contact your pension administrator to find out if this kind of legislation applies to you.

Canadian Pension Plan (CPP)

Division of the Canada Pension Plan is automatic unless both spouses agree otherwise. The reason behind this is to provide some financial protection to a spouse who did not work outside of the home and/or could not reasonably have contributed to the plan. Note that taking money out of CPP can have significant tax implications.

For non-married partners the rules are more uncertain. A non-married partner may or may not be entitled to share in the other partner’s property depending on the particular circumstances involved. If you are in this situation, you should have your lawyer carefully review your circumstances.