Division of property involves the distribution of assets between spouses or cohabitants. This process is required upon the dissolution of a marriage, either through divorce or the death of a spouse, but it can also be undertaken during the marriage if the spouses wish. In a cohabitation relationship, division of property may occur when the relationship ends.
The division of property becomes necessary when a marriage or cohabitation relationship ends. The rules vary depending on whether the parties were married or cohabiting. Regardless, the process concludes with a written agreement detailing the division of assets, signed by both parties. If disputes arise, a property division administrator can assist in mediating and facilitating an agreement.
Division of property between spouses
Upon dissolution of marriage
When a marriage ends due to the death of a spouse or divorce, the couple’s assets must be divided. This includes all marital property, except for separate property, which remains with the individual. Each spouse is required to disclose their assets, as there is an obligation to account. Absent a prenuptial agreement or designation of separate property, all property is presumed to be marital property, with some exceptions. The division is based on the property situation at the time the marriage is dissolved.
During the division, both spouses’ assets and debts are accounted for. Debts are subtracted from the assets, and the net remaining value is split equally between the spouses. Each spouse is entitled to half of the marital property, though the actual items each receives can be negotiated. If the marriage ends in divorce, the former spouses can negotiate how to divide the assets and whether any compensatory payments are needed. The agreement is formalized in a written property division agreement, which, once signed, eliminates any further financial claims between the parties. In cases of disagreement, a property division mediator may assist.
If the marriage ends with the death of a spouse, the division of property occurs between the surviving spouse and the deceased’s heirs or universal legatees.
You can read more about inheritance law HERE.
During marriage
Spouses can also divide property during the marriage by mutual agreement. They decide which assets to include in the division and how to allocate them. It is important to note that property acquired through such a division remains marital property and will be included in any subsequent division.
Division of property between cohabitants
Upon the end of a cohabitation relationship, the common home and household effects are divided if one party requests it. The division is based on the property situation at the time of separation. Only property acquired for joint use is subject to division. Each cohabitant must disclose relevant assets, as there is a duty to account. Requests for property division must be made within one year of the end of the cohabitation. In the case of a dispute, a property division administrator may intervene to help reach an agreement.
Valuing household goods
Neither the Marriage Act nor the Cohabitation Act provides explicit instructions for valuing joint property. However, case law establishes several valuation principles. Generally, the starting point is the sale value of the property, from which sales costs and any capital gains tax are deducted. In some cases, the use value may be more appropriate, especially if the sale value is significantly low. Compensation may be considered for the higher costs associated with acquiring a new home. Upon death, the deceased’s assets and liabilities should be recorded as of the date of death. While standard valuations may be used, the sale value is typically preferred.
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