Divorce can be very trying in the best of cases. It can be downright miserable with a partner who is not interested in fairly dividing assets and being honest and forthcoming. Here are the basics on how money and assets get divided and a few things to look out for so you can make sure you get a fair share.

How Assets are Divided On Divorce

In general, the law in Canada requires that any money, assets or value that was accumulated ‘during the marriage’ is called a “joint asset” or “family property” and should be divided equally between the spouses when they get divorced. That means - stuff you had before you were married (or lived together common law in some cases before marriage) remains yours and stuff you get after formal separation (be careful with this one - see below) is yours, but anything you received / bought / earned / won while you were together gets divided up in half. There are a lot of “BUT’s” though.

For common law partners, the law in Canada is getting closer to dividing assets in the same way as married couples, but it isn’t quite the same. In many provinces, common law partners need to prove something called “unjust enrichment” to be able to get a share of their partner’s assets when the relationship ends. A good example (albeit very stereotypical one) of this is where a woman gives up her job and stays home to have and raise children and support her partner’s career for a number of years - her partner makes all the money, but she has made great sacrifices to her own finances and earning potential on the expectation that they would work together as a unit. Check with your lawyer to understand your particular situation and how the law in your province applies.

Matrimonial Homes are any home that a married couple lives in as a family during the marriage. A matrimonial home has different rules for division, because we believe that both parties have an equal right to live in the matrimonial home regardless of who pays for it. In general, the value of a matrimonial home is divided straight down the middle. However, if one of the partners put in the down payment, then (in Alberta) that partner is deemed to have made a gift of half of the down payment into the marriage. That would mean that the partner who put in the down payment would be entitled to get 75% of their down payment back, but 25% would go to the other partner. In Ontario, any home you bring into the relationship and live in together will be divided evenly between the partners, regardless of whether you owned it before marriage or not. In other words, your partner would be entitled to half the value you brought into the marriage in the home. We are working on another article to show the different rules on this for married vs common law couples by province. Keep your eyes peeled, and always check with your lawyer. Best advice is to make sure you both contribute equally to any down payment on a property you will live in.

What Does “During the Marriage” mean?

Usually, the time period here is from the date you get married until the date of separation. BUT, if you lived together in a common law relationship before you got married, one or both of you may insist that that time should be included - and depending on the situation, it may be. Especially if you had a child together before you were married or owned substantial assets or investments together, or if one of you incurred some big expense on behalf of the couple. This can impact things like how much of a pension is divided between you, whether a house or condo you owned before you go married will be a joint asset or whether debt you incurred together (ie for a wedding or baby or joint car) will be considered joint and divisible.

If you are reading this before getting married - its good practice these days to do a prenup before getting married so that you both agree on what assets and liabilities from before marriage will be divisible and which will not - even if you don’t do the pre-nup to determine how joint assets and family property will get divided later. I am personally not a fan of trying to decide how things will get divided later because you have no idea how the relationship will go, how your relative incomes and assets will change or what the reason for a split might be.

The Date of Separation is even more complicated. It’s not as simple as when you asked for a divorce - it’s a function of a whole bunch of factors, like whether or not you were still living together, sharing finances, paying bills together, working together as an economic unit, whether you had filed for separation, etc.. In general, if you can afford to move out and separate your finances asap and file for divorce - that will be the clearest way to show separation and end the period where the courts will divide assets. (This also has implications for spousal support, since the length of the relationship will determine the length of spousal support.) If you can’t move out right away, there are still ways to make sure you separate financially. Best to check with your lawyer and, as with everything in divorce - document everything!

What Should You Do Financially When You are Planning to Get Divorced?

Bank Accounts and Credit:

• Pay off and cancel joint credit cards and apply for your own credit cards to build independent credit (or if you need to live separate and apart in the same house, at least apply for your own and have very clear written evidence about what money will be put in joint accounts and what it will be used for).
• Pay of and cancel any joint lines of credit
• Use a joint bank account only for essentials like paying down joint debts like a mortgage.
• Create your own bank accounts and have your pay deposited into those.
• If there are kids, have a written agreement about who will have the kids when.
• Stop sharing chores. You cook your meals and do your own laundry.

How People Hide Money

It is exceedingly common for people have secret bank accounts or other stashes that their partners don’t know about. When getting divorced, many people go to great lengths to avoid disclosing all of their assets or to give themselves an advantage in the financial separation. Make sure you are aware of all of these so that you and your lawyer can ensure you get full disclosure.

Here are just a few ways people hide money in marriages that you should be thoughtful of when getting divorced:

• Safe deposit boxes - these can be used to hide share certificates, precious metals, cash, gift cards or a myriad of other valuables.
• Online bank accounts such as Paypal and Venmo
• Overpaying Utility, phone, internet or other household bills
• Shareholder loans into corporations
• Hiding Cash
• Buying precious metals like Gold / Silver and hiding them.
• Buying Prepaid Credit Cards or Gift Cards of all kinds for later use (but be mindful that these can sometimes have expiry dates or interest charged)
• Creating bank accounts in the names of friends or other relatives
• Creating corporations and putting money into bank accounts held by the corporation, or claiming personal expenses through a corporation
• Creating offshore bank accounts
• Lying about the value of assets
• Hiding assets with friends, relatives or in storage units or safe deposit boxes

Having a corporate can make things even more complicated - owners often run a myriad of expenses through their businesses and hold investments in their businesses. So a partner’s salary from their company definitely won’t tell the whole story. Make sure you have as much info as possible on the company’s finances, and consider hiring a forensic accountant to get a better picture of how much the company is worth and how much your partner is actually receiving. It all counts.