Is it true that half of the marriages in Canada end in divorce? Since divorce data in the country stopped being published and analyzed more than a decade ago by Statistics Canada, it is impossible to know for sure. The divorce trends in the U.S. and Europe, along with alternative methods of gathering and analyzing anonymized tax data, indicate that the divorce rate in Canada has declined somewhat in recent years, particularly among younger adults, who tend to wait longer to marry, as well as higher-income couples. In spite of this, an estimated 40 percent of Canadian marriages still end in divorce, meaning that a large number of individuals in the country will someday be faced with the question: What is marital property? And What assets will I get to keep after the divorce?
If you’re planning to divorce, your assets will be defined as either marital property or excluded property. Read on for examples of each, and ask an experienced Toronto divorce lawyer if you need more information.
What Is Marital Property?
Marital property is the total amount of property that you and your spouse acquired during the course of your marriage. Unless there is a marriage contract in place that spells out a different method of dividing marital property, at the time of the divorce, the total amount of marital assets is determined, the amount of marital debts is deducted from that amount, and each spouse is given half of the remainder. Some of the assets commonly considered to be marital property include:
- Your home
- Your car
- Your business
- Household furnishings
- A pension that either you or your spouse earned during the course of the marriage
- Money that is held in savings or checkings accounts or through other means
Bear in mind that you must share the full value of the family home, even if the home belonged to you before the marriage or was given to you or you inherited it during the marriage.
What Is Usually Excluded from Marital Property?
Not all the property that you own during your marriage is necessarily considered marital property and subject to being divided during your divorce. Some of the property that is commonly excluded from asset division includes:
- Property other than the family home that you were personally gifted or inherited during the course of your marriage or that you owned before the marriage. For example, if your grandmother left you a diamond brooch as an inheritance during the marriage, you are not required to sell and give half the proceeds of the brooch to your spouse during the divorce because it was gifted to you.
- Money you received through an insurance company as the result of a loved one’s death or that you received due to a personal injury you incurred as a result of someone else’s negligence.
- Property that you and your spouse agreed to exclude.
Defining your marital assets involves also defining your marital debts as those will need to be addressed during the divorce, as well. Marital debts include:
- Money owed on credit cards
- Automobile or other loans acquired during the marriage
- The amount you still have remaining on your mortgage
Does Marital Property Exist in Common-Law Marriages?
Many couples who have never legally married but have been cohabitating and consider themselves in a common-law marriage erroneously believe that Ontario’s rules for dividing marital property apply to them, as well.
This is not the case.
While this may seem helpful at first glance, not having laws in place to protect each spouse’s rights to marital property means that an individual who was cohabiting in a home owned by their now-former partner will have little right to that home and will be forced to prove how they contributed to the asset in court in order to obtain a share of the proceeds from the asset.
In order to protect themselves in the event of a break-up, many common-law couples are entering into cohabitation contracts, which spell out how the couple intends to separate property if they should wish to part ways.
There is More Than One Right Way
While Ontario requires the marital property to be evenly split when there is no other agreement in place, couples are generally permitted to determine the division of their property on their own by agreement, provided a judge does not find the agreement to be unfair to either party.
There is a general formula for calculating the marital assets and ensuring that each side gets an equitable portion of the proceeds, but many Ontario couples have found creative solutions that prevent a treasured home from being sold and instead make it available for only one of the spouses to live in while the other receives additional assets in exchange.
An experienced divorce lawyer can explore your options for dividing marital property with you.