It is the start of the New Year and I am still basking in the holiday glow. The glow emanates from good will and holiday cheer, from spending time with loved ones and hearing from old friends, from a little time off work, indulging in good food and drinks, and certainly from all the new gifts and goodies.
Each holiday season most of us will receive gifts from our families, friends, neighbors and perhaps – ourselves. Some gifts will be useful, others beautiful, some very sentimental. These gifts will be used or consumed, displayed or wrapped up, and well, added to our various accumulating piles of ‘stuff’.
By ‘stuff’ I mean all those items big and small that fill our homes and offices. Lawyers call ‘stuff’ chattels or personal property. Family law lawyers refer to our ‘stuff’ as the “contents of the matrimonial or family home”.
Many of us spend considerable time and expense building up our piles of stuff. When spouses separate these piles will need to be sorted, divided, potentially valued and possibly sold.
In Ontario when married spouses separate technically each spouse is entitled to one half of the value of all accrued property, and not one half of the property itself. This means that the family stuff is to be listed on a balance sheet in either your column, or your spouse’s column, or jointly. The value of your stuff is totaled together with the remainder of your other assets. You debts and liabilities are deducted from this total, with certain items excluded (e.g. traceable inheritances). The resulting sum is a spouse’s “net family property”. In theory, the value of all the family assets from the Fabergé egg to the 15 year-old crockpot, will be factored in when determining net family properties.
There are a few different ways to arrive at the value of your stuff. You and your spouse may agree to a value (e.g. you both agree the couch is worth $150). Or if you and your spouse are unable to agree to the value of certain items you can agree to mutually retain an individual to value that item. Or if you cannot mutually agree to a valuator you may each choose your own valuator to have the item valued. If the valuators arrive at different values you may be required to seek a decision from a judge or arbitrator as to the value of the item, or if the item is to be sold.
In Ontario market value is used when valuing personal items. Market value is not how much you purchased the item for, nor is how much it will cost you to replace the item, and it is not the value to you personally. Market value means the price a willing purchaser will pay to a willing vendor for an asset. As the market for used personal property is limited family law lawyers often explain to clients that except with reference to antiques or art many of the contents of the typical middle class home will be valued at garage sale prices.
Not surprisingly, after considering the expense of a valuator or the legal costs required to have a value determined, clients often choose not to take the technical route with regard to all the family property.
As a family law lawyer it is my job to present the options and to advise clients with regard to valuing or dividing family property. Whether a client decides to value certain items, or to negotiate a division, will depend on the monetary or sentimental value of the object to him or her. If a client wishes to divide their assets rather than listing them as part of their net family property, they should make a detailed list as soon as possible of all the items in the home. The list should be broken down into 2 categories: i.) the stuff they want, and ii.) the stuff they do not want. The ‘stuff they want’ list should then be reviewed, with the client highlighting the items they simply cannot live without. Clients should provide their lawyer with all of their lists, the wants, don’t wants, and can’t live withouts. This will help the lawyer strategize in accordance with the client’s instructions.
Below are some further tips to help clients develop their lists:
a.) Try to divide your items such that each spouse’s total items have an approximately equal value,
b.) The children’s personal items remain with the children to reduce the disruption and loss in their lives as much as possible,
c.) If you are negotiating an item using lawyers, balance the replacement costs for the item against the amount of legal fees likely to be accumulated negotiating for that item, and
d.) Focus on your needs, don’t use the exercise to ‘get back at’ your spouse: you will only waste time and emotional energy.