Bennet Waugh Corne Lawyers - Lawyer - Family Law - Real Estate Law - Law Firm - Winnipeg - Manitoba

Monday, July 22, 2013

But I Bought this Before I Even Knew You: Assets Acquired Before the Relationship

Week Three: Previously Acquired Property

by Kimberly D. A. Soul and Alison L. Bennet

All property and the increase or decrease in value of this property, acquired in contemplation of a relationship or during a relationship are shareable. The value to be shared is the value as at the date of separation.

Only the increase or decrease in value during the relationship of pre acquired property is shareable. For example, prior to the commencement of a relationship one party has an RRSP worth $10,000.00. At the end of the relationship, on the date of separation, the party’s RRSP is worth $25,000.00. The increase in value, $15,000.00, is shareable between the parties in the overall accounting.

Often one party owns real estate prior to commencing a relationship. If the real estate remains in the sole name of that person only the increase in value of the property is shareable. For example Party A owns a home in his/her own name prior to commencing a relationship with Party B. Party B moves into the home and lives with Party A for 10 years. Party B is entitled to one half of the increase in the property value during those 10 years. In addition, Party B has Homestead Rights in the property. See The Homesteads Act of Manitoba.

 

Posted by Alison Bennet at 12:00 AM 1 Comments

Monday, July 08, 2013

Jointly owned property

Week Two: Jointly held property (real and personal)

By Kimberly D. A. Soul

Jointly held assets and debts are to be divided equally. Because they are owned jointly, these assets are not necessarily valued at date of separation; rather the value on the date of sale or transfer is relevant. A common example is a jointly owned house (real property). Unlike other assets it is possible to apply to the court to partition or sell real property.

If the house has a value of $200,000.00 at date of sale but is not sold until a year later, by which time it increased in value to $250,000.00, it is the $250,000.00 that is equally shared. One party will often keep an asset and then compensate the other for one half of the gain or keep a debt and be compensated for one half of the loss. Assets and debts can be transferred from one party to the other or put into the sole name of one party to finalize the division.  

If the parties cannot agree on how to deal with the joint asset, the court can order sale of the property.  When it comes to the family home, certain factors may resulting in postponing the sale.

Personal property (for example: household contents) are typically jointly owned however as a matter of practice lawyers often include these items in a Family Property Act accounting.

Posted by Alison Bennet at 12:00 AM 0 Comments

Tuesday, July 02, 2013

How is Property Valued and Divided?

Week One: How is Property Valued and is it Divided?

by Kimberly D. A. Soul, and Alison L. Bennet

After separation it is helpful if clients make a list of all the assets and debts in their name as well as in their partner’s name. Oftentimes parties do not know the complete financial picture of their partner. Each party is required to disclose to the other all property and debts in their name. Each party will ultimately complete and sign a Form 70D which sets out their respective assets and debts. If a party does not voluntarily disclose their assets and debts they will be ordered to do so by the Court.

The value of property is generally determined as of the date of separation (the current market value as of that date). To determine the value of an item it can be appraised by a professional appraiser. Oftentimes parties will agree as to the value of minor items to avoid appraisal costs. Bank account statements, credit card statements, investment statements etc will prove the value of the property at the date of separation. Vehicle values can be determined using a Black Book Value or consulting with a dealership. Prior to meeting with your lawyer it is best to have as many of these documents compiled as possible.

Once the value of assets and debts are determined a Family Property Act Accounting (for non joint assets or debts) can be completed. The total of Party A’s assets less their debts provides a net position for Party A. The same is done for Party B. The net positions are then equalized. Each party should end up with one half of the total value. For example:

                Party A has $10,000 of assets and $2,000 of debts for a net position of $8,000

                Party B has $15,000 of assets and $5,000 of debts for a net position of $10,000

Total: $18,000/2 = $9,000 to each party. Party B would thus owe Party A $1,000 to equalize their positions.  The payment would then equalize the value of the 2 parties' date of separation net worths, but each party keeps their own assets and debts.

The court, or the parties by agreement, then determine how the payment will be satisfied, and this can include transferring of assets.

This is the general scheme.  Like many things, the devil is often in the detail; when it comes to family property, the issue is usually what value should be attributed to the items, after consideration of tax and other issues.  Another issue is whether the value of the asset should be included in the accounting at all for reasons including it was preacquired, acquired by way of gift or inheritance, or, in some cases insurance benefits.  More about some of these issues will be discussed in later posts. 

 

Posted by Alison Bennet at 1:13 PM 0 Comments

Topics


Notice to Readers:

The articles on our website are for general information purposes only, and are not intended to be complete or exhaustive descriptions of the law. The articles and comments should not be relied on as legal advice or opinion. The articles are current only as at the date they are posted on the website, and the law is subject to change without notice. If you require legal advice or opinion on your own unique fact situation, we would be pleased to offer you our assistance and we invite you to contact us.