Bennet Waugh Corne Lawyers - Lawyer - Family Law - Real Estate Law - Law Firm - Winnipeg - Manitoba

Thursday, September 19, 2013

Where did our money go? - dissipation of family property

Week Six: Dissipation of Assets

by Kimberly Soul

Sometimes it would be unjust to divide family property equally.

The conduct of the parties, such as one party committing adultery or being abusive, is not relevant when determining whether property should be divided unequally.

Property could be ordered by the Court to be divided unequally if one party has dissipated assets. Dissipation of assets occurs when one party gives large gifts to another person, spends excessive amounts of funds on another person, or on gambling, or on vacations etc. The conduct of a person can be relevant when considering whether the person has dissipated assets.

The definition of dissipation in The Family Property Act of Manitoba is as follows:

"dissipation" means the jeopardizing of the financial security of a household by the gross and irresponsible squandering of an asset;

 

If the Court finds there has been dissipation, it can order that the value of the assets lost can be added back into the equation, as though they still existed.  A spouse or a common law partner is required to bring an application to the Court before the expiry of two years from the date of the dissipation or from the date of the discovery of the dissipation otherwise the request for considering the dissipation will be denied by the Court.

There are other situations in which family property can be unequally divided.  The test is different depending on whether it is a commercial or family asset.  Unequal division of assets is very rare.

 

Posted by Alison Bennet at 12:00 AM 0 Comments

Wednesday, September 11, 2013

Inheritance

Week Five: Inheritance

by Kimberly Soul

Inheritances received by one party are not shareable with the other party if the gift was intended for that party alone. In addition, the inheritance must be kept separate and not converted to a family asset otherwise the value is shareable. If an inheritance is used to pay for a family vehicle, deposited into a joint bank account, used for a family trip or used as a down payment on a jointly owned home these funds are no longer exempt from sharing - in other words, they are part of the assets to be shared with the other spouse.   If an inheritance is kept in a separate bank account (in the recipients own name) these funds would remain the separate property of the recipient of the inheritance (in other words, you do not have to share the value with the other spouse).

Posted by Alison Bennet at 3:11 PM 0 Comments

Monday, August 12, 2013

Pensions - What happens to my plans for retirement?

Week Four:  Pensions

by Kimberly Soul and Alison Bennet

Pensions are an important asset, not to be overlooked upon separation. Like all other assets that accumlate while in the relationship, these too must be shared and/or divided.  The rule of thumb is that one half of the increase in value of a party’s pension during the relationship is shareable with that party’s spouse or common law partner; there are some differences between plans which impact how they are divided. 

The first step, as with any other asset, is to figure out its value.  Often, the Pension Plan Administrator will complete this calculation at no cost.  It is important that prior to contacting your Pension Benefits Administrator that the parties agree on the date of cohabitation and date of separation as these dates will be used to calculate the amount of the entitlement. Often Pension Benefits Administrators will not redo the calculation if the date of cohabitation and date of separation change. The calculations are complex actuarial calculations and typically we have found that clients are only able to obtain one calculation.  In some cases, it is necessary to obtain the services of an actuary to calculate the value of the asset. 

Federally regulated employment pensions are deemed property and shareable pursuant to The Pension Benefits Standards Act.  The value of the asset is then included in the family property accounting along with all other assets.  This legislation sets out that the division of the pension can be done in any amount. For example: if one party’s entitlement is $10,000.00 but pursuant to the other property accounting the party is only receiving $4,000.00, the parties are permitted to conduct a transfer of $4,000.00. It is common practice to include the value of a federally regulated pension in the parties’ Family Property Act accounting. In addition, with federally regulated pensions a party waiving their interest to their entitlement does not need to know the exact amount of their entitlement to effectively and legally waive their interest. This is not the case with provincially regulated pensions.  It is of course recommended that you never waive your interest to any asset without knowing what it is worth.  Once the accounting of assets is completed, and included as part of a separation agreement or court order, it normally cannot be changed.  Because federally regulated pensions do not have to be divided equally, as part of the negotiation process the parties may balance part of the value of the pension against other assets.

The Pension Benefits Division Act applies to certain federally regulated pensions such as pension plans provided by Public Service Superannuation Act, Canadian Forces Superannuation Act, Royal Canadian Mounted Police Superannuation Act to name a few. The transfer of funds to one party must be in an amount equal to their entitlement which is similar to The Pension Benefits Act.

The Pension Benefits Act applies to provincially regulated pensions in Manitoba. A party waiving their entitlement to a pension governed by The Pension Benefits Act must sign a Pension Benefits Spousal/Common Law Agreement and obtain Independent Legal Advice. In addition, the party waiving their interest must know the exact amount of their entitlement. The party opting out of receiving their entitlement to the other party’s pension must be provided with a statement showing their entitlement, called a commuted value statement. A commuted value statement can be requested from a Pension Benefits administrator. The transfer of funds of an entitlement to a provincially regulated pension can only be done if the full entitlement is being transferred. For example: if one party’s entitlement is $10,000.00 but the parties have negotiated a resolution and they’ve agreed that only $4,000.00 is to be transferred – this transfer would not be able to occur. The Pension Benefits Act prohibits the transfer of any amount except the exact amount of the entitlement as set out in the Commuted Value Statement (plus the interest accrued).

The Pension Benefits Standards Act, The Pension Benefits Act and The Pension Benefits Division Act all apply to married persons and common law relationships but vary in their definition of a common law relationship.

Pursuant to The Pension Benefits Division Act a common-law partner “means a person who establishes that the person is cohabiting with a member of a pension plan in a relationship of a conjugal nature, having so cohabited for a period of at least one year”.

Pursuant to the Pension Benefits Act of Manitoba, a common law partner is defined as follows:

"common-law partner" of a member or former member means

(a) a person who, with the member or former member, registered a common-law relationship under section 13.1 of The Vital Statistics Act, or

(b) a person who, not being married to the member or former member, cohabited with him or her in a conjugal relationship

(i) for a period of at least three years, if either of them is married, or

(ii) for a period of at least one year, if neither of them is married;

 

As a result of this definition if neither party is married but only cohabitated for one year, one half of the increase in value of the pension is shareable. If either person is married the pension is not shareable until they have cohabited for three years.

Pursuant to The Pension Benefits Standards Act, a common-law partner is “in relation to an individual, a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year”.

Canada Pension Plan credits are handled a bit differently. These are shareable between married persons and persons that have cohabitated together in a conjugal relationship for at least one year. Currently in Manitoba, parties are not permitted to enter into an agreement not to divide their pension credits between them. Canada Pension Plan will not abide by an agreement between parties not to share in each other’s pension credits unless the agreement was signed before June 4, 1986 and specifically sets out that Canada Pension Plan credits are not to be split. 

 

Posted by Alison Bennet at 1:23 PM 0 Comments

Monday, July 22, 2013

But I Bought this Before I Even Knew You: Assets Acquired Before the Relationship

Week Three: Previously Acquired Property

by Kimberly D. A. Soul and Alison L. Bennet

All property and the increase or decrease in value of this property, acquired in contemplation of a relationship or during a relationship are shareable. The value to be shared is the value as at the date of separation.

Only the increase or decrease in value during the relationship of pre acquired property is shareable. For example, prior to the commencement of a relationship one party has an RRSP worth $10,000.00. At the end of the relationship, on the date of separation, the party’s RRSP is worth $25,000.00. The increase in value, $15,000.00, is shareable between the parties in the overall accounting.

Often one party owns real estate prior to commencing a relationship. If the real estate remains in the sole name of that person only the increase in value of the property is shareable. For example Party A owns a home in his/her own name prior to commencing a relationship with Party B. Party B moves into the home and lives with Party A for 10 years. Party B is entitled to one half of the increase in the property value during those 10 years. In addition, Party B has Homestead Rights in the property. See The Homesteads Act of Manitoba.

 

Posted by Alison Bennet at 12:00 AM 1 Comments

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