So now that you have decided to end your marriage, the next decision you should probably make is “Who gets what?”. Therefore, one of the other aspects that would require high priority is the preparation of your entire assets, debts, and resources. You must be wondering whether you have to share even the assets that you bought through your hard-earned money?
The answer is yes! Because according to the Canadian separation laws, marriage is an equal partnership. So, even if you were the only breadwinner in the house while your wife took care of household chores, their contribution to the relationship is equally important and recognizable.
Sometimes deciding on how you and your spouse will fairly divide property and other assets could be seriously challenging, and having a legal professional who can act as a mediator can help make it easier for you during an emotionally stressful time. But it’s always good for you to understand the law and prepare assets appropriately so that it won’t suddenly wreak havoc on your finances and well-being.
Here Are Some Things to Keep in Mind While Preparing Your Assets for Divorce in Canada
1. Organize Your Finances
The initial step that you can take before dividing your finances is to make sure that you know precisely well not only what you “own” but also what you “owe”. Yes, not only your assets but also your debts must be calculated both as an individual and as a couple. For this, you can begin by gathering all your financial paperwork because the proof is essential and so is well-documented paperwork.
Also, never hide any of your assets from the authorities, as it can later backfire because if you lie during discovery or your deposition in order to hide assets, you’ve committed perjury which is a punishable crime. And trust us you wouldn’t want to bear that burden as well along with the entire divorce process.
Make a list of your assets
Make sure you have copies of important financial information and note down all the names of financial institutions and account numbers as well. Once that is completed, you can make a list of your assets, and as mentioned make sure that you do not hide any assets that you have owned as a couple or as an individual. Your assets include everything and anything, ranging from joint or individual bank accounts, pension plans, properties, homes, investments, and even your CPP or QPP credits. Also, you may include the current market value of these assets and analyze what it may be worth in the upcoming years.
Make a list of your debts
Similar to the list that you made for your asset, you can make another one for your debts. In this list also make sure that you do not exclude anything that you owe and everything is precisely listed. The list must clearly specify what you owe, which is your debts and you can also separate how much you owe as a couple and as an individual. Your debt list should also include everything from credit card debts, personal loans, house mortgages, student loans, etc. Make sure that all your debts are included and that you don’t miss out on anything
2. Deal With Joint Accounts and Joint Debts
For this, you might actually want to sit down with your partner and decide on whether the bank accounts for both debts or savings should be closed or not. Because, if you do not close joint accounts, you both will still have access to the money in those accounts and can be held legally responsible for repaying debts that have been accumulated. Or in some cases, we have noticed that some couples might want to keep the joint account active for a certain period of time, this could be to complete mortgage payments or for student loans.
In either case, it will be best if you hire a family lawyer in Brampton who has experience in these financial settlements. These lawyers can provide you with relevant advice on whether the account should be left open or closed immediately. Therefore, in such cases where decision-making is quite challenging, it’s better to work with your lawyer first. Also, as mentioned initially, this should be done with the awareness of your spouse because some financial institutions require both partners to approve before they can make changes in current account statements.
3. Update Your Beneficiaries
Most couples tend to keep their partners as beneficiaries for almost everything including retirement funds, insurance, and other trusts. But, since you are getting a divorce you might no longer need your ex named as the sole beneficiary on many assets. However, keep in mind that even if you rewrite your will or the beneficiary on your assets, your spouse will most probably remain entitled to some of the assets if you pass away before the divorce decree is finalized, and we hope that does not happen.
But the best step would be to change the documents as soon as possible to limit what he or she receives, and it is also a good way of showing what you actually want to do with your assets. We mentioned “as soon as possible” because in some cases once divorce proceedings have begun, your ability to change beneficiaries may be limited due to what is known as an ATRO or Automatic Temporary Restraining Order. If you and your spouse can come to a conclusion regarding the beneficiary status, you could acquire a separation agreement in which you would each forfeit claims to each other’s property. But, sometimes this process could be quite complicated, particularly if the marriage has lasted for a long time and if you both own properties jointly.
These are just some of the few things to keep in mind while preparing your assets for divorce. And in fact, there are a lot more things that couples should know about finances and assets before going ahead with the divorce. The family lawyers would have come across couples who have faced severe challenges in keeping their finances and assets well-documented and precise.
And they cannot be blamed because managing financial matters along with the emotions and distress of a divorce can be overwhelming. Therefore, it’s always better to hire a professional agency or lawyers to take care of your financial challenges, so that you can focus on other important factors.