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

Tuesday, July 02, 2013

How is Property Valued and Divided?

Week One: How is Property Valued and is it Divided?

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

After separation it is helpful if clients make a list of all the assets and debts in their name as well as in their partner’s name. Oftentimes parties do not know the complete financial picture of their partner. Each party is required to disclose to the other all property and debts in their name. Each party will ultimately complete and sign a Form 70D which sets out their respective assets and debts. If a party does not voluntarily disclose their assets and debts they will be ordered to do so by the Court.

The value of property is generally determined as of the date of separation (the current market value as of that date). To determine the value of an item it can be appraised by a professional appraiser. Oftentimes parties will agree as to the value of minor items to avoid appraisal costs. Bank account statements, credit card statements, investment statements etc will prove the value of the property at the date of separation. Vehicle values can be determined using a Black Book Value or consulting with a dealership. Prior to meeting with your lawyer it is best to have as many of these documents compiled as possible.

Once the value of assets and debts are determined a Family Property Act Accounting (for non joint assets or debts) can be completed. The total of Party A’s assets less their debts provides a net position for Party A. The same is done for Party B. The net positions are then equalized. Each party should end up with one half of the total value. For example:

                Party A has $10,000 of assets and $2,000 of debts for a net position of $8,000

                Party B has $15,000 of assets and $5,000 of debts for a net position of $10,000

Total: $18,000/2 = $9,000 to each party. Party B would thus owe Party A $1,000 to equalize their positions.  The payment would then equalize the value of the 2 parties' date of separation net worths, but each party keeps their own assets and debts.

The court, or the parties by agreement, then determine how the payment will be satisfied, and this can include transferring of assets.

This is the general scheme.  Like many things, the devil is often in the detail; when it comes to family property, the issue is usually what value should be attributed to the items, after consideration of tax and other issues.  Another issue is whether the value of the asset should be included in the accounting at all for reasons including it was preacquired, acquired by way of gift or inheritance, or, in some cases insurance benefits.  More about some of these issues will be discussed in later posts. 

 

Posted by Alison Bennet at 1:13 PM

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