Breakin’ up is now easier to do, or at least more certain, thanks to Remmem v. Remmem, 2014 BCSC 1552. The Supreme Court tackled some major outstanding property division issues under the Family Law Act with regards to cohabitation agreements and separation and division of assets. In a case that will have a dramatic impact in people either litigating or mediating their way through a separation, the Supreme Court laid out some of the following general principles for excluding assets:
- Significantly unfair, the new standard for reapportionment (as well as for reviewing separation agreements or cohabitation agreements with respect to property) means “something weighty, meaningful, or compelling.” The old standard was simply unfair. While admittedly somewhat vague, this actually does provide more guidance as to what the phrase means.
- Putting an excluded asset (gift, inheritance, property brought into the relationship) into a joint asset does not mean the asset loses its exclusion—so if you gratuitously put a house into joint names which was originally an excluded asset, you will likely retain the full value of that exclusion without something more to indicate that it’s a gift.
- The excluded asset is a given piece of property, not a given sum—so if you bring in a house worth $100,000, and it’s declined in value, you don’t get to take out $100,000.
This may also mean that, for example, someone bringing in $70,000 worth of cash into a relationship who fritters it away, or perhaps even simply spends it on non-tangibles, will have decreased the value of the asset and they will not necessarily be able to get $70,000 back.
Something else that will have to be determined is, if cash is placed in a joint asset such as a bank account with other funds mixed in, how will that be traced? First in/first out? A percentage of the overall funds put in there? There are several different methods of doing this, and although Ontario seems to have mostly worked out how they will do similar kinds of tracing, it has never been as important in the family law context and it remains to be seen what will happen. These kinds of decisions can affect a lawyer’s judgment on not only likely results in the event of litigation, but also how to draft a cohabitation and separation agreements.
If you have property that was gifted, inherited, or that you brought into a relationship that you’re concerned about, you may wish to seek legal advice for some assistance in how to deal with it. Remember, it’s never too late to amend a cohabitation agreement or get one if you have concerns—you can even do it after you’re married.
For further information on how assets are treated within the context of divorce, contact one of our Family Law lawyers.