Going through a divorce is an emotionally, mentally, and physically draining experience. On top of that, having to divide your property and assets with your spouse can put you under additional negative emotions, pressures, and struggles. Moreover, the process itself can be complicated for you to process and may seem like a lot to take on by yourself. Therefore, with this article, we will be providing you some insight into what assets are up for division and how the general procedures go.
What is Family Property or Family Assets?
Family property or family assets – also called marital assets – include every asset that was acquired by one or both spouses strictly during their marriage period. The Family Law Act (FLA) specifically dictates and defines the following: the marriage period, the inclusion and exclusion of assets, and the concept and process of dividing family property due to divorce.
The marriage period is determined by two bounding time points that include the marriage date and separation (also called valuation) date. While the marriage date is unquestionably obvious, its counterpart has multiple definitions in the FLA:
- The date on which the couple separates without any prospect of getting back together
- The date on which the divorce is approved
- The date of the marriage annulment
- The date on which one of the spouses submits an application that is eventually accepted
- The date before the date of the death of one of the spouses
The separation date can be a matter of disagreement between the two spouses if the value of the assets fluctuates significantly around the time of separation. However, in most cases, the date the couple separates is used.
What Assets are Included In the Division Process in a Divorce?
Assets that are required to be divided include the ones acquired during the marriage period. This means any type of property owned by any or both of the spouses during their marriage would be under consideration. Another condition is that those assets must continue existing upon and after the separation date. These assets can include:
- Real estate such as a home (also called a matrimonial home), vacation house, land, rental property, etc.
- Private property, such as personal items, jewelry, furniture, etc.
- Intangible property, such as intellectual property
- Any type of vehicles
- Investments or businesses (or an increase in their value during the marriage period if owned separately by one of the spouses)
- Pension or any social services income
- Interest coming from loans owed to either of the spouses
- Bank accounts of the two spouses, unless they are co-owned by a third party
It is important to mention that the matrimonial home, as defined by the FLA is subjected to an exclusive set of rules and conditions that prevent it from being excluded from division like other assets. So, it is the only asset considered even when acquired outside the marriage period. Moreover, any other real estate property, like a family cottage, can become a matrimonial home if the couple lives in it for a significant period.
What Assets are Excluded from the Division Process in a Divorce?
Unlike the matrimonial home, some types of assets can be excluded from the calculation and division processes. This could include assets acquired before the marriage, or after the separation date. As for the assets owned within the marriage period, they can be excluded if:
- They were a gift or an inheritance or traced to any of the two cases
- They are a result of damage costs paid due to injuries, mental distress, etc.
- They are acquired from being the beneficiary of a life insurance policy in case of someone’s death
Here, it is of significance to highlight that assets like a business that were acquired before the marriage date are excluded from the division. However, an increase in their value during the marriage period will be included. In addition, any pre-owned real-estate property used as a matrimonial home automatically becomes an included asset. Finally, any of the above-excluded assets require documented proof.
What is the Process of Division of Family Assets?
Even though the family or marital property to be divided upon divorce is viewed as a distinguished entity, one must take notice that it will not be subjected to a physical division, but a value-based one. Hence, it is the value of the assets that will be calculated by each of the spouses. The term used for the calculated amount is the net family property that will be compared with the two spouses. The calculation process is as follows:
- Calculate the separation date assets
- Calculate the separation date liabilities/debts
- Calculate the separation date total (assets – liabilities/debts)
- Calculate the marriage date assets
- Calculate the marriage date liabilities/debts
- Calculate the marriage date total (assets – liabilities/debts)
- Calculate the net family property (separation date total – marriage date total)
Partners with the higher net family property will be obligated to pay an equalization payment which amounts to half of the difference between the two net property accounts, to the partner with the lower net property amount. Such a payment system is governed by the equality principle, described by the FLA, which states that the married couple must divide their family property equally between each other.
Mediation Services for Division of Family Property in Ontario
There are a few exceptions to the equality rule when an equal division of assets would be unfair. There are other cases when the spouses come to a successful agreement to satisfy each other’s terms. However, in such cases, it may be a great idea to seek advice from professionals. This way, both parties will be well-informed about their asset claims and eligibility and will undergo the process with some guidance along their side.
GTA Family Mediation is one of the best-suited mediation firms to provide both thorough separation guidance and detailed financial analysis that will make such hard times slightly more bearable. At GTA Family Mediation we provide mediation services that prioritize achieving a successful separation for both parties. Going through a separation can be an extremely difficult process but we thrive to minimize the amount of stress you have to take on. Additionally, we offer extremely competitive prices and put client satisfaction at the forefront of our driving principles. At GTA Family Mediation we also offer a free exploratory session where we try to understand your circumstances better and share with you our plan for your case. You can also take a free survey to obtain your free separation analysis report, so it becomes clearer where to begin.
Conclusion
The Family Law Act determines how couples should be dividing their assets and property during the divorce process. Although it states what assets are included and excluded, their identification can be difficult on your own and may lead to you claiming less than what you are rightfully entitled to or giving out more than you should. Furthermore, even the simplest concept like the separation date can also be hard to recognize and agree on without the help of a professional who can guide you through it.
If you are seeking help with your separation and feel like you don’t know where to start, We are here for you! Book your consultation appointment with GTA Mediator and we promise to help you every step of the way. You can contact us through our many channels:
