What Happens When The Value of Your Property and Assets Goes Up or Down in Your Separation or Divorce?
If you’ve wondered what happens to any property payment in your separation or divorce when the value of your assets, investments or property rises or falls, you’ve come to the right place.
I will discuss this important issue in this video.
Hi, my name is Thomas O’Malley. I’m an experienced family lawyer in Durham Region and the GTA.
Please remember to like this video and subscribe to my Youtube channel if you have not done so already.
When you are married and get separated, the Ontario formula for property division applies. You have to determine the value of your property and assets on the date of separation. You must also set out the amounts of your debts on the date of separation.
You spouse must also make the same calculations.
When you have jointly-owned assets, such as your home, and jointly-held debts, such as a mortgage or line of credit, you use half of the value of the jointly-owned assets and half of the amount of the jointly-held debt.
Then you deduct the total amount of your debts from the total value of your assets to get the net value of your property on the date of separation.
You are also allowed to deduct what is called the cost of disposition from certain assets. For example, you are allowed to deduct the cost of the real estate commission for the sale of your home and the tax amount you must pay on cashing out your RRSPs.
Now you must determine the equalization of net family properties. According to this property formula in Ontario family law, the spouse with the larger net value of property must pay half of the difference to the other spouse.
Certainly, the value of your assets, such as stocks and real estate, can rise or fall after the date of separation.
Does this affect the property calculation and equalization payment in your family law case?
The rise or fall of the value of your assets or your spouse’s assets only affects the property payment in rare cases.
In a recent case, the Ontario Court of Appeal held that a drastic drop in the value of a significant assets can affect the amount of a property payment when a larger property payment would be unconscionable.
However, you must remember that the “unconscionability” test is very hard to meet in Ontario family law. Unconscionable means that a larger payment is more than harsh or unfair to the paying spouse.
For example, if you own stocks valued at $200,000 on the date of separation and they drop to a value of $175,000 a few months after the date of separation, this would not meet the unconscionability test.
In short, do not rely on the fact that the value of your assets and investments has dropped since the date of separation to think your property payment to your former spouse will then be reduced.
It will only be reduced in very rare cases.
If you have any questions about your separation, divorce or family law case and you would like our help, feel free to contact on my Facebook law office page, that’s O’Malley Family Law, or call me at 905-434-8837 and I’ll point in you in the right direction.
Click here to join my free Facebook GTA and Durham Region separation and divorce support group: GTA and Durham Region Separation and Divorce Support Group
Please make sure to share this important information with your friends, family members and co-workers.
Leave a Reply