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Property Division Explained

Posted in Divorce By Heather A. Davidson

Division of Property and Assets

One of the most important parts of a divorce settlement or common law separation is the division of matrimonial property. Who will get the house? And, related to that, who can afford to keep the house, or to buy the other party out? What about RRSPs, pensions, and vehicles? What about the household contents? It is never easy to untangle a life, from a property perspective, but there are a few guiding principles that can make it a bit easier.

Matrimonial Property

If a couple is married, they automatically fall under the Matrimonial Property Act, and everything that they’ve acquired during the marriage, with some exceptions, is generally divided equally. The exceptions have to do with property that may have been acquired from a third party or insurance settlement, or in cases when one person has contributed disproportionately, or when the property has grown significantly, due to one person’s efforts, after the separation, but before the divorce. Some property is exempt from distribution, including property that was brought into the marriage buy one party and that can still be traced in its current form. It’s up to the person who is claiming such an exemption to prove that the property was in existence before the marriage, and is still in existence in a way that can be clearly traced. Some property, like RRSPs and Pensions, has tax implications. It can be divided between the parties as is, by way of pension division or tax-free RRSP rollover.

Separating parties may want to agree to a division of property that is different than that set out by the Matrimonial Property Act – and that is OK, but it’s also important to understand what you would be entitled to under the Matrimonial Property Act.

Common Law Property

If a couple is not married, the law is a little bit more complicated. You don’t automatically get a share in the other party’s property just because you have been living together, even if that property was acquired during the relationship. You would have to show that you are entitled to a share of the property through an equitable remedy. All of these remedies essentially have to do with whether or not one person has received a financial benefit or advantage and the other party has suffered a corresponding loss, whether monetary or otherwise. The court will also look at whether or not there was an understanding between the parties with respect to the division of the property, and the length and nature of the relationship.

While it’s not our goal to take your common law property division matter to court, as we believe that it’s possible, and preferable to settle these matters outside of court, it is very important to understand what a court is likely to do when you are considering a settlement. In the case of common law property division, the specific division of property is highly discretionary and it is difficult to accurately predict what a court would do in light of all of the circumstances.

Property Division Explained - posted June 20, 2016

Read more articles about: Divorce

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