Catherine Hyde, Family Law Clerk
I have recently been involved with a number of cases dealing with “Excluded Property” in order to determine whether certain items of property can be excluded from the “net family property” calculation. To determine this one first needs to look at the Family Law Act
Section 4(2) of the Family Law Act provides that:
(2) The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:
- Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.
- Income from property referred to in paragraph 1, if the donor or testator has expressly stated that it is to be excluded from the spouse’s net family property.
- Damages or a right to damages for personal injuries, nervous shock, mental distress or loss of guidance, care and companionship, or the part of a settlement that represents those damages.
- Proceeds or a right to proceeds of a policy of life insurance, as defined under the Insurance Act, that are payable on the death of the life insured.
- Property, other than a matrimonial home, into which property referred to in paragraphs 1 to 4 can be traced.
- Property that the spouses have agreed by a domestic contract is not to be included in the spouse’s net family property.
- Unadjusted pensionable earnings under the Canada Pension Plan. R.S.O. 1990, c.F.3, s.4 (2); 2004, c.31, Sched.38, s.2 (1); 2009, c.11, s.22 (5).”
The Act further states that onus to prove such a deduction or exclusion is on the person claiming it.
In order to exclude such property, you must first prove that it was a gift from a third party (not your spouse), that it was received during the marriage and that it can be traced to an asset that you had on the date of separation.
If you received the asset by way of an inheritance, it will be necessary to review the Last Will and Testament of the individual to determine whether the intention was to gift the asset to you and whether it is subject to the provisions of the Family Law Act or not.
Clearly there are many issues to be dealt with when considering whether or not you will be entitled to claim exclusion for certain property and how much you are entitled to claim. Your lawyer will best be able to explain to you the various issues and concerns relating to your specific assets that you are seeking to exclude. Keeping complete records of any monies received and spent including bank statements, purchase receipts and investment statements, copy of correspondence from Estate lawyers, distribution statements, etc. will assist in tracing the assets to a valuation date asset.
Although you never anticipate that you are going to be divorcing and need such documentation it is simply a good financial step to take.