Property Division and Individuals
Married spouses are entitled to a division of property upon separation due to a breakdown in the relationship or death. A one-time division of property may also take place during the marriage in special circumstances.
The intention is for spouses to share equally in the financial fruits of their marriage or liabilities. Spouses will not share in the value of any assets or liabilities brought into the marriage, or gifts/inheritances received during the marriage, since these are not related to joint efforts during the marriage. In limited circumstance, spouses may be entitled to an unequal division of property.
Marriage does not change ownership or create personal liability for a spouse. It is the value of the assets and liabilities that are shared, not the asset itself. Therefore, it is important to obtain proper values.
Common valuation issues that arise include:
- determining whether a property is a matrimonial home;
- determining ownership of assets, often based on equitable interests;
- business valuations;
- pension valuations; and
- determining whether a family loan is really a debt.
There is no automatic right for unmarried spouses to share in the property of the other. Any sharing of property will be based on traceable contributions to specific property. Such equitable claims are often complicated and will likely require legal assistance.
Property Division and Business
For business owners, separation and divorce pose particular challenges. Owning a business may make many aspects of the process more complex, particularly in the areas of support and property division.
There may be several complications when dealing with property division for a small-business owner, such as:
- Value: The exact worth of a currently operational company may be difficult to determine without turning to a business valuator. We have trusted professionals who can help us.
- Family-run businesses: If your business is co-owned by extended family members, this may complicate its value for the purposes of splitting it between divorcing spouses.
- Equitable interests: If a spouse, married or unmarried, has contributed significantly to the value of the business without compensation he or she may have “sweat equity” in the business.
- Co-owned businesses: Often, spouses who own a business together will decide that one partner will buy the other out. Sometimes they will decide to sell the business to a third party and split the proceeds. Sometimes, however, the spouses both wish to continue working together. It’s important to set up an Agreement that will allow them to work together without marital disputes affecting the business.
If necessary, Brown Law Firm will bring in accountants to help us determine income and draft a Separation Agreement that allows for the variability of your business’s profitability. Better yet, protect your business with a Marriage Contract to avoid the issue altogether.
Other Important Property Rights
Aside from Property Division, there are Property Rights that may be important to you:
- Exclusive possession: While both married spouses have the right to stay in the home during separation, in practical terms this is often a very bad idea and one spouse generally moves out. If neither wants to leave, either spouse can ask the courts to essentially force the other one out. The courts will consider factors such as the best interests of the children, whether there are other accommodations available, and whether there has been violence. This option is not available to unmarried spouses.
- Possession for unmarried spouses: Unless you are the owner of the home, or you have a residential tenancy agreement, technically you do not have a right to remain in the home if the owner spouse asks you to leave. The owner spouse does not need your consent to sell or encumber the home, as with married spouses. In short, you may have less rights than a tenant. It is essential that unmarried spouses consider a Cohabitation Agreement to clearly define their rights upon separation and during the relationship to avoid unexpected results.
- Equitable Claims: Regardless of who is on the title to a property or other asset, if you contributed to an asset financially or through other means, and were not compensated for that contribution, you may be entitled to financial compensation or a share in the asset.
Property issues can be complex with nothing less than your future financial security at stake. At Brown Law Firm we can help provide you with an honest assessment of your entitlement and fair restructuring options for your family finances.