When a couple decides they no longer wish to live together after a period of separation, they will often seek a divorce. A major component of any divorce—and often a point of contention in divorce proceedings—is the division of property between the parties. How does the court determine what gets divided among the couple, and what doesn’t? Your Family Lawyer in Toronto explains.
Assets
All assets accumulated from the moment the marriage is made official are taken into consideration in a divorce, regardless of which party is responsible for the purchase. This includes all physical assets of value, such as homes, cars, artwork, jewellery, and appliances, as well as intangible assets, such as investments, pension plans, RRSPs, and shares in a business.
The value of each asset can be tallied to what is known as the ‘net family property’. This figure is used to ensure that each party gets their fair share of the wealth accumulated.
Debt
Just like wealth, debt accumulated from the moment of marriage is split between parties. This can include credit card debt, mortgages, lines of credit, or other outstanding loans.
The amount owing for the debt can be added, tallied and removed from the ‘net family property’, ensuring that each party shoulders their fair share of the debt accumulated.
Pre-Existing Assets/Debt
Any assets or debts that were accumulated before the marriage are not counted towards the net family property. For example, if the groom has outstanding student loans before marriage and the bride already owns a condo, the bride’s condo wouldn’t be added to the ‘net family property’, nor would the groom’s student debt be subtracted from it.
This usually applies to any items purchased during the marriage. So, for instance, if a husband had a sports car before marriage, that sports car wouldn’t count towards the net family property. However, if he sold that sports car to buy a minivan while they were married, then the minivan would count towards the net family property. An exception to this is the matrimonial home!
The Exception: Marriage Contracts/’Pre-Nups’
A marriage contract (commonly known as a pre-nuptial agreement or ‘pre-nup’)is an agreement that is signed by both parties before marriage to provide exceptions to the rule. These documents are commonly used as a precautionary measure, to look out for their interests in case the marriage doesn’t work out.
Marriage contracts essentially override the traditional rules regarding the separation of assets. Like any other contract, there are conditions surrounding the execution and enforceability of a marriage contract, and it should be reviewed by your Toronto family lawyer beforehand.
Learn More from your Toronto Family Lawyer
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