Many people going through a divorce may experience a whirlwind of emotions and feelings. But divorce can also bring a lot of anxiety and confusion, mainly around who gets what.
In general, dividing assets in a divorce involves identifying all the assets deemed marital property (acquired during the marriage) and determining how they split between both parties.
Marital & Non-Marital Assets
Assets that accrue during a marriage are either marital property, exempt property, or increased value of the exempt property. Dividing these assets in a divorce can vary depending on the laws of the province and any special circumstances.
In Alberta, the Matrimonial Property Act and the Family Property Act dictate property division during a divorce. Distributed assets are valued at the date of trial, not at the date of separation unless agreed in writing by both parties.
Marital assets are those assets acquired from the date of marriage and can include:
- Real properties (land or buildings)
- Personal properties (furniture, jewelry, vehicles)
- All forms of legal titles, such as land, cash, and vehicles
- Joint or financial assets such as investments and bank accounts
- Pension benefits accrued during the marriage
- Life insurance policies
- Money or property payable after the marriage ends (debts);
- And more
Not all assets are subject to division. Often referred to as non-marital assets, these exemptions can include the following:
- Assets owned before the marriage
- Inheritance of a property
- Property received as a gift from a third party
- Proceeds or settlements received for damages (awarded to only one spouse)
- Insurance proceeds (awarded to only one spouse)
Exempt property that has increased or changed during the marriage may include division. However, this doesn’t mean that it requires equal division.
Splitting Assets in a Divorce
During a divorce, each spouse must properly declare or disclose their property. Below are general steps to splitting assets in a divorce:
Identify All Assets
This includes tangible assets such as real estate, vehicles, and personal property, as well as intangible assets such as bank accounts, investment accounts, and retirement accounts, and any business interests.
Determine Which Assets Are Marital Property
In Alberta, only marital property (property acquired during the marriage) is subject to division in a divorce. Separate property (property owned before the marriage or acquired through inheritance or gift) is generally not subject to division unless there has been an increase in value to same.
Any debt incurred during the marriage is considered family property and must be divided equally between the spouses.
Determine the Value of Each Asset
Once you have a list of assets, you must determine how much everything is worth. This can be done through appraisals, evaluations, or other methods, depending on the type of asset.
Determine How to Divide the Assets
There are several ways to divide assets: equally or equitably. In Alberta, the general principle is that each spouse is entitled to an equal share of the family property.
However, certain circumstances may justify an unequal division.
Other options may include the following:
- Selling the assets and dividing the proceeds
- Assigning certain assets to one spouse in exchange for other assets or financial compensation
- Having one spouse buy out the other spouse’s share of the asset
Consider Tax Implications
Some assets, such as retirement accounts, may have tax implications when divided. It is important to consider these implications and seek the guidance of a financial advisor or tax specialist when dividing these types of assets.
Negotiate an Agreement
The spouses can try to reach an agreement on their own or through mediators or other third parties. Seeking the guidance of a legal professional ensures that the division of assets is fair and legally sound.
Each spouse should use an independent attorney to help navigate the process and protect individual rights. If this is not possible, the court will decide how to divide the assets.
Divide the Assets
Once an agreement is final or a court order is issued, the assets must be physically divided or transferred to the appropriate party.
Family Law Advice
Divorce is not a simple process. However, more often than not, it can be an amicable process to reach a fair and equitable solution for all parties.
With professional support and guidance, you can navigate the splitting of assets and move forward with confidence and security. Contact us at KH | Dunkley Law Group for a custom consultation. View our flat fee pricing for more information.
This memorandum is for informational purposes only, does not constitute legal advice or an opinion, and does not create a solicitor-client relationship. This is an overview and is not intended to be a complete and exhaustive explanation of the concepts covered. This information may become inaccurate based on passage of time or changes in the law. Nothing herein should be relied upon without seeking the advice of a lawyer.