Understanding the Division of Assets During Divorce

couple sitting on the opposite end of the bed

In Canada, the division of assets during divorce is governed by a set of statutes and judicial decisions that differ in different provinces. The division is based on several factors, including the value of the assets, the size of the family, and the duration of the marriage. To navigate through this difficult process, it is important to understand the different options available to you and to ensure that you are clear about the goals you are trying to achieve through the division of assets.

Having a divorce lawyer who can guide you through this process can be invaluable to ensuring that your interests are protected and that you receive the best possible outcome. In this blog, we’ll discuss the key aspects of the division of assets during a divorce in Canada and consider why hiring a family lawyer can be an effective strategy to help you navigate this process.

Laws Governing the Division of Assets

In Canada, the division of assets during a divorce is governed by the Family Law Act. A married couple is treated as equals under this act, and there is no financial privilege between spouses. This means that the spouse who ran the household and the one who made income are both equal in terms of their contributions.

When the marriage ends, properties and assets are divided between the two. The general rule is that the value of the assets and the income received by each spouse during the marriage is divided in accordance with the equitable distribution provisions of the Family Law Act. Properties or assets that a spouse brought into the marriage will be retained unless the value has significantly increased. In that case, the profit on the increase would be divided among the spouses in proportion to their respective contributions.

This applies to almost all types of property and assets except for a few, e.g., matrimonial homes.

Holding divorce papers

Matrimonial Home

This is the home that the married couple lived in together during the marriage and is considered to be the family home. Unlike the general rule mentioned above, if either of the spouses brought the home into the marriage, they will not be able to retain ownership of it upon divorce. Regardless of who owns the matrimonial home, the home would be divided between the two spouses according to the property’s value.

Remember that the laws vary from province to province, so make sure to consult with our qualified family lawyer for further information. This way, you’ll be in a good position to ensure your rights are protected and a favourable outcome can be achieved for you.

Factors Considered When Dividing Assets

When dividing assets, many factors should be taken into consideration. These factors include the following:

Length of Marriage

The length of the marriage is an important factor in deciding how the couple should divide their assets. Typically, the longer the marriage, the more significant financial ties, and the more assets should be shared. It divides assets more complexly.

Financial Contributions

The spouses should divide the assets according to the contribution each one made to the income, debts, assets, and other liabilities during the marriage.

Household Contribution

The contributions of each spouse to the relationship, child-rearing, and other household activities are also considered when dividing the assets. These contributions are often overlooked but can be significant in determining how assets will be divided.

Arrangements Prior to Marriage

If the couple has made any pre-marriage agreements regarding property or assets, these will be factored into the division of assets after the divorce. These agreements could include joint tenancies, prenuptial agreements, and wills.

Future Earning Potentials

The spouses may also consider the potential future earning ability of each spouse when deciding how much to divide. For example, if the husband has a job and is earning more money than the wife, she may be entitled to alimony or support payments to help cover the difference in their income.

Legal Principles Governing Division of Assets

In Canada, the division of assets during a divorce is governed by certain legal principles. These principles include:

Equalization of Net Family Property

This states that the Net family property (NFP) of each spouse will be calculated. Both spouses can calculate the NFP by calculating the value of all assets acquired during the marriage minus any debts and liabilities. The final value of the NFP will then be divided equally between the two spouses, regardless of who earned the majority of the assets or whose name was on the deed to the property. The net value of properties will be calculated after excluding any debts, mortgage payments, and other liabilities.

Excluded Properties

Some properties are excluded from the equalization of net family property. This includes gifts, inheritances, properties or assets bought during the marriage, and matrimonial homes. Identifying and accounting for these items when dividing the assets after the divorce is important.

Here are some other exclusions to marital assets:

  • Gifts, inheritances, and trusts
  • Proceeds from insurance policies, retirement accounts, and investment earnings
  • Business assets and equity in the business
  • Assets and properties that were agreed to be exempt before marriage
  • Non-shared property
  • Assets bought after separation by one of the spouses with the intent of being an exclusive property

Pension Plan

If the couple has a pension plan credited to the account of either spouse during the marriage, it will not be considered part of the joint equity of the property of the marriage. The division of pension plan credits is done separately from the division of other assets in the marriage.

Unjust Enrichment

This is another independent legal principle that applies to the division of assets in a divorce. If the plaintiff has gained wealth that was not due to their efforts or good faith effort to preserve the marital home, in this case, they may be required to compensate the other party.

Role of Divorce Lawyer in Division of Assets

 Division of assets during divorce

Divorce can be an emotional and stressful experience for everyone involved. It is especially difficult when there is a conflict between spouses over the division of marital assets and debts. This is where a divorce lawyer can help. A divorce lawyer is there to assist both spouses in understanding the legal framework that governs the division of assets and liabilities during a divorce.

Our lawyers specialize in family law and have extensive experience handling cases of divorce and other family law issues. Here’s how a divorce lawyer can help you during the division of assets:

Understanding the Legal Process

The legal process can be confusing at times, and it’s easy to get overwhelmed by the sheer amount of information you need to know and understand before moving forward. From equalization of net family property to excluded properties and other lesser-known but important details, you need to understand your rights as well as the responsibilities of the other party in the divorce. A lawyer can handle all of this and more so that you don’t have to worry about missing a step.

Negotiating a Settlement

 Divorced couple arguing

If you and your spouse have reached a mutual agreement regarding the division of your assets, you can take the agreement to court for approval. This may be the most difficult part of the process, but if you are well-prepared and have an experienced lawyer to guide you through the process, you should not have any problems. It’s also a less stressful and more cost-effective approach than handling the matters on your own.

Due Diligence

At the earliest stage of the divorce process, it’s a good idea to conduct a detailed analysis of all of the assets and liabilities of your family. This will help you understand your situation better, and it will also ensure that you have all the relevant information about your legal rights. Your divorce lawyer will do the due diligence and will ensure that you have an accurate assessment of your assets and liabilities.

Protecting Your Rights

Finally, a lawyer can help protect your rights during the division of assets process. They can ensure that you’re being treated fairly and equitably and that your interests are being represented. An experienced lawyer will also ensure that you are provided with all the relevant information about your legal rights so that you can make informed decisions about your estate and finances.

The division of assets during divorce can be a challenging time for both parties involved. A family lawyer can be an invaluable resource during this time, as they can advise you on what is fair to divide and help guide you through the proceedings.

Family lawyer in Canada

If you’re looking for a reliable and experienced divorce lawyer, you’re in the right place. At Nanda & Associate Lawyers, we specialize in all aspects of family law. We handle all types of cases, including child custody and visitation, division of assets, child support, divorce, and more.

We also have a team of immigration lawyers, business lawyers, real estate lawyers, and federal court lawyers who can handle all your legal needs.

Contact us today to get started!

 

 

Disclaimer: This article is only intended for educational purposes and shouldn’t be used as a substitute for legal advice.

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