For many people, divorce is one of the most disruptive financial events that they may go through. The Matrimonial Property Act in Alberta calls for divorcing spouses or cohabitating partners to divide their assets and debts equitably. Equitable division usually represents an equal 50/50 split. Because this means that people may lose 50% of their assets to divorce, Edmonton divorce attorneys frequently hear the question “How can I protect my assets in a divorce?”
The truth is that asset division will occur. However, you and your former partner have the option of negotiating the split privately, which could give you an opportunity to keep assets that are a priority for you. In addition to pursuing your priorities during negotiations, divorce law in Alberta exempts certain assets from the divorce process. Taken together, you may succeed in retaining your most important assets with the assistance of an Alberta property division lawyer.
What Assets Are Exempt From Divorce in Alberta?
Even in the absence of a prenuptial or marital agreement that would have segregated specific assets from the marital union, Alberta law declares some assets to be solely yours.
The following assets may be exempt from the divorce process if you:
- Received it as a gift to just you from a third party
- Inherited it
- Owned the asset before getting married
- Collected it as a settlement in a lawsuit, like a personal injury claim
- Received it as proceeds from an insurance policy
The law might undo these exemptions if you mingle what would have been an exempt asset with your marital assets. For example, you inherit a sum of money but then deposit it in a joint account with your spouse. Similarly, an inherited house that you later add your spouse as an owner could reduce or eliminate the exemption.
Asset exemptions can become complicated when their value increases during the marriage. Your spouse may have a right to part of the value of an inherited property if both of you contributed funds to remodelling the home.
As a first step in protecting your assets during a divorce, you can consult an Edmonton divorce attorney to determine what assets are exempt or partially exempt. Any assets that meet legal exemptions would protect some of your personal wealth from the divorce.
Can I Protect My Pension in a Divorce?
People who have been accruing pension benefits at a job often dislike the prospect of splitting it with an ex-spouse. However, pensions and other retirement accounts are subject to division in a divorce.
You may exempt part of your retirement benefits if the account started prior to your marriage. In that case, the value of the fund before getting married would be yours alone, but the benefits earned during the marriage qualify as marital property.
You do have the option of using your pension or other retirement accounts as a bargaining chip when negotiating the division of property. If keeping all of the retirement benefits to yourself is a top priority, you could consider giving over a different asset in exchange for keeping your retirement fund. This decision can be tricky due to the potential for a retirement fund to fluctuate in value. Pensions require actuarial calculations to arrive at their value. You will need to work with a financial professional to determine the current and future value of the account before making any decisions.
Planning Your Asset Division Negotiation Strategy
Protecting your assets when you get divorced relies mostly on negotiating the best split that you can. Ideally, you and your former partner will hash out the details without resorting to litigation. Taking financial issues to court where a judge must decide introduces risk. You might not get the outcome that you want, which is why divorce lawyers in Edmonton encourage clients to negotiate a settlement. Mediation is often a useful tactic for preventing lengthy court battles. Legal advice remains very important during negotiations. You learn what you have a right to and avoid digging in on a position that could likely lose in court.
Due to the importance of negotiations, you need to decide your top priorities. You won’t be able to keep everything, but you can strive to keep what is most important to you. Many people in this situation place the most value on retaining control of their business assets. This might be achieved by forgoing any right to the value of a family home or negotiating a structured buyout agreement that allows you to compensate an ex-spouse without draining a business dry.
If divorcing people come to terms about asset division, the result does not have to be exactly 50/50 as long as both parties agree. Additionally, if a divorce is litigated, a judge might be convinced that something less than exactly equal portions would be fair.
Prolonged Separation May Be an Option
In some cases, people decide that an actual divorce would be too problematic. This decision leaves you with the option of long-term separation. Alberta law already calls for 12 months of separation to qualify for a divorce. People typically work out some division of property, expenses, and child custody during a separation, which paves the way for the final divorce order.
However, people can stay in a state of separation indefinitely. This would prevent the full division of assets necessary to legally dissolve the marriage. Separation enables people to live different lives while leaving assets untouched by divorce. The drawback of this approach is that neither person can remarry due to still being legally married.
Legal Advice About Your Divorce in Edmonton
Every aspect of a high net worth divorce requires careful consideration of the near-term and long-term financial consequences. An Edmonton divorce lawyer at Kolinsky Law has experience representing complex marital estates. We can help you navigate decisions about property division and child custody to prepare for settling your divorce. Our insights may make it easier to decide when to negotiate and when you should litigate. Contact our office to discuss your concerns about divorce today.