When a couple decides to separate or divorce, in most cases, they are legally required to divide assets they accrued throughout their marriage by equalizing their net family properties. Determining the amount of assets included in your net family property will have a large impact on resulting equalization payments. However, there are certain assets an individual may acquire during their marriage that can be excluded from their net family property, thus lowering its total value.
Section 4(2) of the Family Law Act (“FLA”) outlines types of assets that can be excluded from an individual’s net family property. To be considered an exclusion, the asset must have been acquired after the date of marriage. Exclusions may include:
- Property acquired as a gift or inheritance from a third party
- Income gained from property acquired as a gift or inheritance
- Damages gained through personal injury settlements
- Proceeds of a life insurance policy
- Any assets that have been agreed by domestic contract to be excluded from net family property
- Unadjusted pensionable earnings under the Canada Pension Plan (CPP)
- And more
The FLA also stipulates certain conditions under which exclusions may exist. For example, the matrimonial home is treated differently than other assets. It may not be excluded from net family property in certain situations, even if it was received as a gift or inheritance. Because of the matrimonial home’s unique position within Canadian law, it can be helpful to consult with one of our family law lawyers if you require legal advice in this situation.
For gifts and inheritances to be excluded from net family property, it may be helpful for the original donor to officially mandate their exclusion in a will or other official document. If property acquired as a gift or inheritance has increased in value during a marriage, the donor’s will or official document may also stipulate that such increases are also to be excluded from a party’s net family property.
It is also possible for assets acquired through the use of gifts or inheritances to be excluded from net family property. For example, if an individual acquired a boat using funds they received from an inheritance, the value of the boat along with the remaining value of the original inheritance would both be excluded from their net family property. The principle of tracing property back to gifts or inheritances can apply to a variety of assets acquired throughout a marriage, including income. For assistance identifying assets eligible for exclusion, contact our Toronto property division lawyers at Gelman & Associates today.
Schedule a Consultation at Gelman & Associates Today For Professional Advice About Net Family Property Exclusions
Understanding what can be excluded from your net family property during your separation or divorce can have a large impact on how your assets get divided. Although Ontario Law stipulates a variety of accompanying conditions, your gifts, inheritances, settlements, and other important assets may be protected from division through exclusion. Contact our family law lawyers at Gelman & Associates today for advice on what assets may be excluded from your net family property and how to secure them during your separation.
Disclaimer: For specific legal advice on your family law matter, please consult with a family law lawyer. The content in this article is not intended to act as legal advice and is instead intended to act as a general overview of a legal topic.
