Thinking of Getting Married, or Worse, Divorced? Here is what you stand to lose unprotected

You have worked hard to get where you are. You have supported your family in every way possible and have provided them with a generous and secure lifestyle. Many sacrifices have been made along the way. But your failing marriage has put it all at risk. You are now facing the prospect of having to hand over to your future ex-spouse a sizeable portion of the assets you have toiled so hard to earn. You have no choice. It is the law. The only question is how much.

A common misconception exists that matrimonial property is simply split in half upon marital breakdown. That is not so. The Ontario Family Law Act (the “Act”) sets out specific and sometimes complicated rules regarding the division of marital property. Essentially, the Act requires married spouses to share equally in any increase or decrease in the value of their property over the course of the marriage. The process requires each spouse to determine the net value of all of the property he or she owns at the end of the marriage and to subtract from that amount the net value of the property owned as of the date of marriage, taking into account certain exclusions permitted by the Act. The value arrived at is referred to in the legislation as a spouse’s net family property. The spouse with the lesser net family property is entitled to receive, typically by way of cash payment, one-half the difference between the two net family properties. That is, the net family properties are equalized.

Having said that, a spouse can minimize the amount of any equalization payment he or she might be required to make through careful structuring of his or her portfolio in a manner that takes full advantage of the deductions and exclusions allowed by the legislation. Being proactive about protecting your wealth is essential. Waiting until you and your spouse have agreed to separate or divorce before starting to implement wealth preservation strategies is not an option. A simple rule of thumb no matter where you are in the relationship is to conduct yourself as if you and your spouse are separate as to property. That is, whatever you acquired before or acquire during the marriage should be maintained in your name alone to the greatest extent possible.

In the coming weeks I’ll be covering some of the top wealth protection strategies that can be employed to preserve the money and assets you have earned and accumulated through careful planning and hard work. Simply put, the less you have to pay, the more you get to keep. Putting the time and effort in to ensure that family financial matters are dealt with in a clearly thought out and straightforward manner will allow you to devote the time and energy needed to deal with those emotional aspects of a failed marriage for which the law can offer little assistance or comfort.

So, join me next week when I’ll start getting into the strategies. See you then.

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