Overview of how it works
When a married or common law couple decides to separate, the division of family property is always a pressing issue. This article provides a general overview of how assets and liabilities are dealt with upon separation and is not intended to provide legal advice. The treatment of assets and liabilities can be complicated, and there are many exceptions to the general overview set out. You are encouraged to speak with a lawyer to obtain advice specific to your family.
The Family Property Act applies to residents of Manitoba. If one of the parties does not live in Manitoba the Family Property Act will apply if Manitoba was the last place of residence of the parties. “Property” includes things such as vehicles, investments, jewelry, real estate, RRSP’s, pensions, shares, bank accounts, household contents, etc.
Assets which were acquired during, or in contemplation of, cohabitation or marriage, and debts which exist at the date of separation are subject to the Family Property Act, but there are exceptions. The specific assets and debts are not required to be shared or divided, and rather the overall value is equalized. To do this, an inventory is prepared of each spouse’s assets and liabilities which existed at the date of separation (or other set valuation date), and each spouse’s net worth is calculated. The spouse with the higher net worth pays an amount, or transfers assets, the other spouse to balance the equation. This is referred to as the “accounting”.
Jointly held assets and debts are not dealt with in the same way as assets and debts held in each parties’ own name. Jointly held assets and debts are already owned and owed equally between the parties. Jointly held homes/land are subject to The Law of Property Act of Manitoba. They do not get added into The Family Property Act accounting, and can be subject to sale.
The date of separation is important as all assets and debts, except joint, are usually valued as of the date of separation. Sometimes parties disagree as to the date of separation, as it is not always the date that one stops living in the same home. It is important to meet with a lawyer to canvass the law in this area.
Unless otherwise specified, the explanations provided apply to married couples as well as common law couples who have either been living together for 3 years (and permanently separated after June 30, 2004) or have registered their relationship with The Vital Statistics Agency. Note that common law couples must make an application for an accounting and equalization of assets within 3 years of the date of separation. There is no such timeline for married persons unless a divorce has been granted by the Court after which the parties have 60 days to apply for an accounting and equalization of property if it has not yet been dealt with.