7 steps to take when dividing property during divorce 

When proceeding with a divorce, a couple needs to determine whether or not they can identify as “spouses.” In most provinces, a couple are considered spouses or common-law if they have been married or lived with each other in a marriage-like relationship for at least two years. Non-spousal partners can make a claim against the property, but the burden of proof on the type of relationship and their stake in the asset can be higher. 

Once a spousal relationship is established, the following steps can be taken to divide up marital assets. 

Step 1: Assets and debts

A couple who intends to divorce must add up all their assets and subtract all their debts in order to arrive at a list of all assets and debts. The assets, known as “family property,” include everything the couple owned separately or together as of the separation date, regardless of who the property belongs to. This is important, since regardless of whose name is on the property deed, when a couple divorces all family property is split equally between the spouses unless an agreement or the courts say otherwise.

  Your family property list should include:

• The family home
• Other land, houses, or condos
• Bank accounts
• Insurance policies
• Investments
• RRSPs
• Pensions
• Business interests

You also need to include the increase in value of excluded property. Excluded property includes gifts and inheritances (even if received during the marriage), insurance proceeds, trust property and any real property one person owned before getting married or living together. However, this doesn’t mean excluded property should be left off the list. Any increase in the value of the excluded property is considered ‘family property’ and this appreciation will be split equally. 

This means if you lived in a home that was owned by your spouse prior to getting married, you may be entitled to only half of the appreciated value of the property from the date you started to live together (or got married) to the date of separation. 

READ MORE: What happens to real estate during a divorce?

Step 2: Contact the professionals you’ll need to consult

While many people will seek out a lawyer to initiate their separation or to finalize their divorce, other professionals may be required in the process, and it’s best to find your team sooner, rather than later. These professionals can include: 

• A family law lawyer
• A professional real estate agent
• Mediators or arbitrators
• A real estate lawyer
• An appraiser
• An independent mortgage planner (or broker with experience with divorce)
• Accountant (or tax specialist)
• Forensic or business accountant (to evaluate complex or suspicious financial activity, such as hiding assets, or to evaluate privately held businesses)

Step 3: Gather paperwork

Review all your paperwork. In particular, you want to determine if there is a cohabitation agreement or marriage agreement that was signed earlier in your relationship. If this agreement—often called a prenuptial or prenup—included property, then you will have to seek out the expertise of a family lawyer.

Step 4: Check the timeframe

Next, you need to verify that you are making a claim within the legal time limits. Married spouses have two years from the date of their divorce; common-law spouses have two years from the date of their separation. 

If you are outside of these time limits, speak to a lawyer. 

Step 5: Confirm your jurisdiction

You and your lawyer will need to confirm the jurisdiction that has the authority to decide on your application for divorce. For most, this isn’t hard to determine as it’s the province you and your spouse lived in up until the date of separation. For some, however, there may be complications. If you and your spouse lived somewhere else for a long time and still own property in that other province, there’s a possibility that you or your ex could seek court orders in that other province. For that reason, you first need to confirm which jurisdiction has authority over what property. 

Step 6: Assess the value of all property

Now that you’ve got your list of assets and debts, and your professionals in place, it’s time to get down to the brass tacks: Figuring out what everything is worth and what is owed. This is often the hardest part.

For property acquired during the relationship, you’ll need to record when you acquired each asset, what it was worth when you got it, and what its current market value is, as of the separation date. Quite often, this will require paying professionals, such as a real estate appraiser (typical cost around $500), or forensic accountants, who investigate and assess portfolios and assets. 

For excluded property, you’ll need to determine the value of each asset on the date immediately before you began to live together or got married, as well as the current market value of the property. Again, you may need to pay for professional assessments. 

Finally, you need to list all common debt as well as personal debt. Much like excluded property, debt brought into the marriage does not become the responsibility of the other person. So, remove that from your calculations. However, debt assumed during the marriage is split equally, just like all marital property. 

Step 7: Negotiate

Now that you’ve got the numbers worked out, it’s time to make your claim. Whether working with a mediator or a lawyer, or just sitting and talking with your soon-to-be ex, you should expect a process of negotiation. Keep in mind, as well, that while the vast majority of divorces result in an equal division of assets and debts, there are circumstances when a court can divide family property and family debt unequally.