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Splitting Assets and Debts

You need to know what you and your spouse are worth together and what you're worth on your own. It sounds like a big job but it comes down to a simple equation:
Net Worth = Assets - Liabilities.

It does get a little more complicated. There are three categories of assets:

  • Joint Assets These include “property” such as the home you owned together and any other real estate holdings; they include joint savings accounts, chequing accounts, mutual funds and other investments, cash, and any business interests that are jointly owned.

  • Your Assets These are accounts that you opened or owned before you were married and to which you have remained the sole contributor. Properties that you owned before you married are also included in your assets.

  • Spouse's Assets These are anything your spouse opened or owned before the marriage, including RRSPs or assets inherited from family members.

Divorce is a federal responsibility in Canada, but the division of property between separating/divorcing spouses is under provincial jurisdiction and each province and territory has its own set of laws to cover these issues. You should be able to get basic information from your provincial government in the form of brochures and booklets about what your province's laws are dealing with property on the breakup of a marriage. If you have substantial assets — or debts — you should consult a lawyer.

Be sure to consider the future value of these assets. If you give up pension, for example, in exchange for keeping the house or up-front money, you may feel short-changed when you reach retirement age. A pension can be very valuable down the road.

You may need to appraise real estate, artwork and collectibles to determine their value. If you both own a business, you will need to value it to determine the amount needed to buy out the other spouse's share of the business. To learn more about divorce proceedings in Canada, visit the Divorce Act.

Information You Will Need

Gather your paperwork into one container, preferably mobile, that will help prepare and organize you for your first encounters with your lawyer. If you have your finances in order, you won't have to pay a lawyer to discover this information. Included should be:

  • Tax returns for the past five years
  • Retirement-account records for both spouses
  • You and your spouse's paycheque stubs to show current income and withholdings
  • You and your spouse's employee-benefit statements
  • Copies of all insurance policies, including life, health, homeowner's and auto
  • Current statements for all bank and brokerage accounts
  • Mutual fund statements
  • Copy of the deed or lease agreement on your home
  • Statements on all outstanding loans, including your mortgage and credit cards
  • Employer stock-option plans
  • Copies of wills and trusts
  • Copies of powers of attorney
  • Receipts for major purchases
  • A copy of your estate plan
  • Copies of birth certificates and marriage licenses

Depending on what is being contested, you may also want to keep records for the following:

  • A prioritized list of assets you want to keep
  • Your children's records, including how much time you spend with them, the activities you do together and the expenses associated with their upbringing.

Remember, if you have your finances in order, you won't have to pay a lawyer to discover this information.

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