DIVISION OF FAMILY PROPERTY – WHO GETS WHAT
Matrimonial property is property owned by either one or both of married spouses. The rules of how family property is accounted for and divided between spouses are set out in the “family law” legislation of each province and territory. For a comprehensive list of and links to this legislation please see the end of this article. It is important to note that this system of property division is only available to married spouses; common law spouses must use other remedies such as unjust enrichment and constructive trusts. Most family law legislation sees marriage as a partnership and looks at the assets accumulated during marriage as family property. In Canada, both spouses are deemed to have made equal contributions to the relationship, no matter what functions or roles they assumed in the family during their marriage. A married spouse who takes on the major share of household and child care responsibilities has the same right to property equalization as the spouse who makes a greater financial contribution. When a married couple decides to divorce, negotiating who should have what property - the house, the furniture, the car, for example - and how to divide other assets, such as investments or pension benefits, can be extremely difficult. Having outstanding debts makes this process even more difficult and more complicated. A lawyer can assist you in identifying and valuing your family’s assets and in then negotiating or litigating, if absolutely necessary, to achieve the best possible outcome for you.
What Is a Family Asset?
A family asset is anything owned by you and your spouse together, or by either of you separately, and ordinarily used for a family purpose. 
The most common examples of family assets are the family home and its contents, family vehicles, bank accounts and investments, stocks, bonds and RRSPs. Other assets that are frequently also the subject of property division negotiations include frequent flyer miles, stock options, time shares, pets, inheritances, trusts, lottery winnings, family businesses, art, jewelry, antiques, guns, stamp collections and other collectibles, gifts, engagement rings, cemetery plots, and club memberships. Pensions earned by either you or your spouse during your marriage are also considered family assets for the purposes of property division on divorce. Personal items - such as jewellery or tools, - that were used by only one of you during the marriage will not usually be included as family assets, nor will any property you might buy after separation, unless you use a family asset, or money received from selling a family asset, to buy it. A business owned by one spouse may be a family asset, if the other spouse contributed in some way, either directly or indirectly, to the start up or growth of that business. A direct contribution might be money or labour; an indirect contribution might be taking care of family and household duties so that the other spouse could concentrate on the business.
What Are Your Rights If You’re Married?
The law treats married couples and common-law couples (opposite or same-sex) the same way in many situations. However, there are some important differences when it comes to dividing property. When married couples separate or divorce, the right to divide property is covered by the provincial legislation that deals with the Family. A list of the relevant laws for each province and territory as well as links to the relevant site of each government is provided at the end of this article.
How Will Your Property be Divided?
Family legislation in all provinces and territories provides a regime for dividing the value of assets and debts that were acquired during the marriage. In the majority of cases each spouse must fill out some form of a financial statement. The financial statement lists all assets that each spouse owned on the date of separation, all debts that each spouse owned on the date of separation, all assets that each spouse owned on the date of marriage, all debts that each spouse owned on the date of marriage and any gifts or inheritances that each spouse received during marriage. The financial statement will be one of the important pieces of information used to calculate each spouse's entitlement to family property. Every Canadian jurisdiction, in some form or another, sets out the requirement of completing and exchanging financial statements.
Will You Have to Share Your Pension?
Pensions are treated the same way as any other asset accumulated during the marriage. That means the spouse with the pension gets credit for the value of the pension on the date of marriage, but will share with the other spouse the rise in the value of the pension during the marriage and until the date of separation. A pension typically needs to be valuated by a professional to establish its value on the date of separation.
How are Debts Dealt With When Dividing Family Property? If You Are Married
Generally, when you separate, both you and your spouse are responsible for the family debts - even debts that are in one spouse’s name only. Family debts are any debts that you or your spouse separately, or you and your spouse together, ran up during your marriage to buy family assets or pay family expenses, including mortgages and loans. It is up to you to arrange with your spouse how you are going to pay for family debts. However, you should be aware that while you and your spouse are both responsible for family debts, if a credit card, loan, etc., is in your name only, the credit card company or bank will consider you solely responsible for the payments - regardless of the payment arrangement you have with your spouse. They will seek payment from you, and it is up to you to seek payment from your spouse.
If You Are Not Married
When you separate, you will be responsible for any debts in your own name and any shared debts (a loan or a mortgage, for example, that both you and your spouse signed for). You will be responsible for debts in your spouse's name only if you and your spouse made an agreement stating that you will be responsible for each other's debts. As with married couples, however, a credit card company or bank will only look at whose name is on the card, and will seek payment from that person. If you have an agreement, it is up to you to seek payment from your former spouse.
After Separation
After you have separated, any debt you take on is usually yours alone. However, if you have joint credit cards, then both of you will be responsible for any money owing, even after you separate. We recommend you contact the credit card companies to let them know that you have separated and to have your name taken off joint credit cards.
If You and Your Spouse Agree on How to Divide Property
If you and your spouse agree to a 50-50 split of your family assets - or you both agree that a different division is fair - then you can go ahead and divide your property without having to go to court. We recommend that you put your agreement in writing and that you both sign it. The agreement about how to divide your property will usually form part of a larger, written separation agreement that covers other issues as well, such as child custody and support. That way, if you run into difficulty later on and your former spouse refuses to live up to the agreement, you can turn to the courts to have the agreement enforced. Signed separation agreements dealing with property will take precedence where they exist and might only be changed by a court if:
- There is a legal flaw in the contract document,
- There is legislation which allows a court to alter a domestic contract such as a separation agreement;
- One or both of the parties did not disclose their assets at the time the separation agreement was negotiated;
- Either one of the parties did not receive independent legal advice before signing the agreement
- The agreement itself allows for judicial intervention.
Some provinces allow their courts to overrule such a contract or agreement if it is blatantly "unfair".
If You and Your Spouse Do Not Agree on How to Divide Property
If you cannot come to an agreement about how to divide your property, then you will need to apply to the appropriate court in your province or territory to ask for a judgment. Provincial courts do not deal with property division on divorce. You will have to apply to the superior court in your province or territory to obtain a judgment dealing with property. In making decisions about property, judges will look at which spouse brought what property into the relationship - the house or furniture or a cottage, for example - as well as what the spouses bought together. The judge will also look at the contributions made by each spouse during the relationship. These contributions may be financial (you paid the rent or mortgage, for example), or non-financial (your former spouse was responsible for all the childcare, cooking and household chores). Generally, you will be able to keep what you brought into the relationship and whatever has your name on the bill of sale. What you bought together, and what you contributed to, may be either divided or shared.
Which Avenue Should You Choose: Agreement or Court?
It is far better if you and your former spouse can negotiate an agreement about how to divide your family assets. If you can negotiate an agreement, either on your own or with the help of a mediator or lawyer, you will know with certainty, exactly with what property, or what value of property, each of you will be leaving the marriage. If you go to court to obtain a judgment you will have little or no control over the result, basically abdicating decision making about your life to a stranger – the judge. Additionally, going to court will:
- Cost you time. The court process is slow, and this will only increase the level and duration of stress you have to endure.
- Cost you money, in lawyers' fees and other costs. While you can choose to represent yourself in court, the forms and procedures are complicated.
Every divorce lawyer has an anecdote about one particularly nasty fight over a toaster, hammer, painting or other item of little or no dollar value. The fight is really about who gets the last word, not the item in question. You need to think about the amount of psychological and emotional energy and money you are willing to invest in order to get the satisfaction of having the last word. If you cannot come to an agreement about how to divide your property on your own, you might want to try mediation. This may involve some cost, but the cost will not be as high as going to court - and the faster you reach an agreement, the lower the cost. In conclusion, readers are strongly encouraged to seek out professional legal sources in their province to ascertain their specific rights in matrimonial property situations. There is too much at stake to try to actually resolve your situation through general legal information material such as this. Additionally, each province has unique matrimonial property division rules (which are sometimes in more than one law). We recommend you get good legal advice before you make any important decisions about dividing your family property.
Please note that the information is general in nature and not intended to be a substitute for legal advice. If you are concerned about how to divide your family property following the breakdown your marriage or common law relationship, please contact a lawyer. You can get free information about how to select and retain a lawyer by getting a copy of the FREE REPORT offered at the top right-hand corner of this page. Do not sign a separation agreement without independent legal advice.
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