What you need to know about splitting up the assets

With an estimated 40 percent of first marriages in Canada ending in divorce, good legal and financial advice is important when it comes to dividing up the family assets.


Key takeaways

  • Divorce can be complicated, so make sure you get good advice.

  • File claims on time and divide the debt.

  • Keep track of exemptions and special rules.


“What’s mine is yours, and what’s yours is mine.” It sounds like a simple enough declaration of love, but when a marriage breaks down, what has been shared is not easily teased apart again.

Marriage is both an emotional partnership and a financial one. From a couple’s wedding day to the day they separate, everything they have acquired together – from homes and vehicles to investments, and even baseball card collections – are things the courts will consider when equitably dividing the family assets. You’ll want to make sure you work closely with your financial advisor.


Understand the law. Get expert advice.

In Canada, a divorce is subject to federal laws that also apply equally to same-sex couples. But the task of dividing up family property and spousal support is governed by provincial legislation, and those laws can vary widely by province. The laws for common-law couples who separate are another matter entirely, and can be different in each province. Working with your financial advisor and a lawyer will help you navigate the laws specific to your situation.

Many lawyers caution that of all the issues in a divorce, child custody and the division of property are the most complex and contentious, and the most in need of expert legal and financial advice.


Get your claims in on time.

Each province and territory sets out its own time limits and cut-off dates for claims for property division and spousal support that are brought to court. In Ontario, for example, the claim must be filed by the earliest of the following dates: two years from the divorce, six years from separation or six months after the other spouse has died. That complexity makes it even more important for advisors to urge their clients to check for the time limits that apply in their case to avoid losing their rights.

What constitutes “property” also can vary from province to province, and spouses are well advised to review the legislation when they are assembling a list of property. In addition to the more obvious items, such as the matrimonial home, income from jobs, Canada Pension Plan (or Quebec Pension Plan) credits and payments, RRSPs and severance payments, courts have also considered time-share schemes and even airline frequent flyer points for property division.


Remember to divide the debt.

Just as family assets are divided, so too are the debts or liabilities that the couple incurred over the course of the marriage: credit card balances, lines of credit, mortgages, car leases, income taxes and penalties owed, and capital gains taxes are all part of the calculation laid out for the courts in a financial statement that must be prepared by each spouse.

That financial statement is central to ensuring that family property is equitably divided, and the courts take that document very seriously. In fact, the statement is an affidavit that each spouse provides under oath. Those who lie about or try to hide assets can be subject to penalties by the courts.


Understand exemptions and special rules.

Each province also allows certain exemptions from the list of property or assets. Those exclusions can include things acquired prior to the marriage, inheritances or gifts received during the marriage, court-ordered damage awards, settlements a spouse received for an injury in a car accident, property excluded by a marriage contract, and possessions acquired by each spouse after the couple has separated.

A matrimonial home is in a class all its own. All courts can take steps to ensure that the home’s value is not affected before it can be appraised. One spouse cannot sell the home or take a mortgage against it without approval from the other. The courts can also order exclusive possession of the home by one spouse, as in cases of family violence or if it is in the best interests of any children involved. In certain provinces, a family home may also be subject to the division of property calculation even if it was acquired before the date of marriage.

Divorce is emotionally and financially complicated. When it’s time to split up the assets (and debts) after a matrimonial split, sound legal and financial advice is important so that both sides can part as simply and equitably as possible.