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Marriage is seen as a social and economic partnership in Canada, and therefore, upon the breakdown of the marriage, all matrimonial property acquired during the marriage should be divided fairly. Matrimonial property comprises of all property acquired by either spouse, or both, between the date of marriage and the date of separation. It does not matter whose name the property is in.In order to reach an overall settlement of matrimonial assets, there are several steps which should be taken. Before considering an acceptable division in line with current legislation and laws it is important to identify and value the various items of matrimonial property.
Matrimonial property includes the following assets:
As a default both debts and property acquired during marriage is divided equally between the spouses, however, based on Section 8 of the Family Property Act of Alberta the following factors must be considered for distribution of property:
1. Contribution of each spouse. For instance, if the wife was a homemaker whole life, then it can be argued she should receive a greater percentage of the family property.
2. Contribution made to acquisition, conservation, and improvement of the family property, such as business that is successful primarily due to the efforts of one spouse.
3. Financial resources and liabilities of each spouse.
4. Earning capacity of both spouses.
5. The length of marriage.
6. Agreements entered by parties before or during marriage.
7. Dissipation of assets, that is when one spouse uses marital assets for their own benefit or depletes the value of the family assets (See details in our blog: How to Stop Dissipation of Property?)
8. Tax liabilities
First step is to always obtain financial disclosures- these are legal forms required to be completed by both parties such that the inventory of family assets and debts can be determined.
Second, the property is divided into four categories:
i. Family property- property acquired during marriage
ii. Exempt property- that is property that will not be divided
iii. Increase in the value of the exempt property
iv. Property acquired post separation, which could be considered family property or an exempt property- based on the circumstances
Third step, valuation of property and debts. This valuation is usually determined by comparing the value of the assets and debts on the date of marriage and the date of separation. But the value of assets and debts could also be based on the date of acquisition and the date of trial.
Fourth step, the net property value is determined by calculating the value of the family assets property and deducting the family debts and that net value is divided fairly between the spouses.
The following are not usually considered matrimonial property:
1. Property you agreed to exclude in a pre-nuptial agreement, a marriage contract or separation agreement.
2. Value of the property before the marriage. If a spouse owned a property prior to marriage, then the value at the time of marriage is exempt
3. Any property acquired as an inheritance after marriage
4. Any property acquired as a gift from a third party after marriage
5. An insurance payout or damages awarded to you by a court or by an insurance company. For example, an insurance payment for injuries you received due to a car accident.
However, note that the matrimonial property exemptions and the division of the family property is a gray area of law. For instance, if a spouse owned a rental property at the time marriage and that property value increases during marriage, then that increase in value of the property could be subject to family property division. Hence, you must contact an experienced matrimonial lawyer for fair division of the matrimonial property.
In Alberta, you must file the Statement of Claim for Division of Family Property (Form FL-02) for the division of matrimonial property.
However, if you wish to also get divorced, then you should file a Statement of Claim for Divorce and Division of Family Property (Form FL-03).
If a spouse cheats, then usually it does not entitle the other spouse to get greater share of the family property.
1. Close joint bank accounts and open separate bank accounts
2. Cancel joint credit cards
3. Put a stop on any future withdrawal from the line of credit
4. Retain a qualified family lawyer to register lien against the family properties.
Your family lawyer and your spouse's lawyer can help you and your spouse work out an acceptable separation agreement. Coming to an agreement on how to divide your property may be a lot less expensive than going to court to divide your property.
However, if you and your spouse cannot reach an agreement, then we, family lawyers, can monitor the process of division of matrimonial property from the beginning to the end and protect your interests by:
i. Reviewing the entire inventory of assets and debts to ensure accountability of all family assets and debts;
ii. We monitor distribution of assets, including interim distribution of family property, such as family home furniture, bank accounts, etc
iii. If property has been transferred into a third party’s name, then we can file liens and make applications to court to protect our client’s interest
iv. We retain experts as required, for instance, engage a qualified property appraiser, retain accountant & forensic accounts, etc;
v. We can also get a court order if a spouse has reduced the value of a property, such as in if a spouse is emptying bank account, then we can get a preservation order to prevent further depletion of the asset.
On the other hand, matrimonial debt or family debt is a debt that was acquired by both spouses, or either spouse, during the marriage that was used for family matters such as for payment of household expenses, the mortgage on the family home or debt used to finance a family car. If some debts were acquired after you separated from your spouse, they may be considered matrimonial debts if they were used to pay for necessary living expenses, such as to maintain the family home or other assets.
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