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Understanding excluded property laws can help in divorce

Family law in Ontario regard a marriage as an equal partnership between spouses. When married couples decide to divorce, each spouse's net family property is calculated and compared before a decision about a possible equalization payment is made. At the time of the couple's separation, the assets each party brought into the marriage -- excluding the matrimonial home -- will be taken out after debts and liabilities have been deducted. Each spouse can then receive 50 percent of the marital property along with his or her personal assets and any excluded property.

Certain assets may belong to one spouse -- if no intermingling with family property took place. These are called excluded property that might include gifts and inheritances that were given or left to one spouse as his or her personal property. A settlement amount received by one spouse in a personal injury claim will also be excluded from property division, and the same applies to life insurance proceeds. Property listed as excluded in a marriage agreement may also protect ownership of individual assets.

Concerning the rules about gifts and inheritances, any intermingling with family assets may change the status of the gift or inheritance to family property. For example, if an inheritance is used to finance refurbishments in the matrimonial home, it will no longer belong to the recipient alone, but by both spouses. In some cases, one party may be required to prove sole ownership of an asset -- if it is challenged by the other spouse.

Any Ontario resident who is considering divorce may have many unanswered questions about the legal procedures and the finer details of property division. For this reason, it may be a good idea to consult with an experienced divorce lawyer before any steps are taken. At this difficult time, it is important to make informed decisions from the onset, and professional support and guidance can be invaluable.

Source: FindLaw Canada, "Gifts, inheritances and other excluded properties", Miriam Yosowich, Accessed on July 15, 2017

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