Types of Excluded Property in Divorce

Posted on June 30, 2024

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When you’re getting a divorce, one of the biggest sources of contention is division of assets. During a challenging time emotionally and socially, dividing property and other financial assets can become more stressful when you have more complex assets that are not easily divided down the middle.  In Ontario, the rules surrounding the division of property are designed to ensure fairness and equity. However, if the rules are not properly reflecting a division of property that you feel is more fair, you may need a seasoned family lawyer and civil litigation lawyer in Toronto to take a closer look. At Karrass Law, our experienced legal team has a background in both litigation and family law allowing us to provide comprehensive guidance and representation when it comes to excluded property and division of assets. 

If you are trying to finalize a complex division of assets, don’t go at it alone. Contact our team for robust support. 

Here’s what you need to know about excluded property in Ontario during divorce.

Property Owned Prior to Marriage

One of the primary categories of excluded property in a divorce is property that was owned by one spouse before the marriage. This can include real estate, savings accounts, investments, or personal belongings that were acquired before the wedding day. The purpose of this exclusion is to recognize that assets brought into the marriage by one party should remain theirs alone, as long as these assets have not been mixed with marital property. For example, a home that one spouse owned before the marriage would typically be excluded from the equalization process, provided it wasn’t used as the matrimonial home, which carries its own set of rules.

Inheritance and Gifts

Another common type of excluded property is inheritance received by one spouse, regardless of whether it was received before or during the marriage. Gifts received from third parties exclusively by one spouse are also excluded. Gifted items remain the individual property of the recipient, assuming they haven’t been integrated into the marital assets. For instance, an inheritance deposited into a joint bank account used for family expenses could lose its excluded status. If inherited property has been commingled or integrated into marital assets, talk to our team on what you’re entitled to and get legal advice on how to ensure you get back what you are rightfully entitled to.  

Personal Injury Settlements

Settlements from personal injury claims that compensate one spouse for pain and suffering are typically excluded from marital property. These funds are considered compensation for personal loss and therefore remain with the injured party. However, portions of the settlement that compensate for lost wages or medical expenses paid during the marriage might not be excluded If you feel like you’re owed a portion of a settlement, talk to our team of civil litigation lawyers and experts who will help you understand what you’re owed and will represent you in your pursuit of your share via mediation, arbitration, or court. 

Property Acquired After Separation

Any property acquired by either spouse after the separation date is generally excluded from the marital property pool. The separation date marks the end of the accumulation of marital assets, so anything acquired afterward is not subject to division. This rule is intended to provide a clear financial cut-off and prevent disputes over post-separation earnings and acquisitions. However there are some exceptions based on debt owed or support such as spousal support or child support. To better understand what you’re entirely to after separation or in divorce, contact the Karrass Law team for 

How Can These Complications Be Avoided Preventatively 

Even excluded properties and their designation can be complicated  in the face of divorce negotiations. To be sure you get what’s yours, contact a family lawyer experienced with complex division of assets. One of the most effective ways to avoid complications with excluded property is with a domestic contract, i.e. a prenuptial or postnuptial agreement. These agreements can clearly outline which assets will remain excluded in the event of a divorce. By defining property rights and responsibilities upfront, couples can prevent disputes and ensure a more straightforward division process. 

Manage Complex Division of Assets with Karrass Law

Division of assets is always a challenging time, especially when factors like excluded and hidden property are factored into the situation. The best way to leave settlement negotiations with what you’re entitled to, especially in cases of complex division of assets, is by seeking representation from a reputable family lawyer. At Karrass Law, our legal team is comprised of both family lawyers and civil litigation lawyers, giving us a more adept understanding of the situation and its nuances. This allows us to better represent your best interests. 

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