Unlike the matrimonial home, some items can be excluded from property valuation when a couple is divorcing.
The rules for exclusions and what can be excluded from valuation, is found in the legislation of the province or territory in which you reside. Though legislation about exclusion is often similar from province/territory to province/territory, it’s likely not the same. You should consult with the legislation for your region to find out exactly what is excluded.
The rules of exclusions mostly apply to legally married couples in many provinces/territories, because division of family property is usually only reserved for married couples who are divorcing.
Why are certain items excluded?
While the law in Canada recognizes that marriage should be an equal partnership, there is also property that can belong to someone that is not intermingled with shared spousal property, such as inherited property.
Usually it’s something one of the spouses receives from a third party that ends up on the excluded property list. The question is also whether what has been gifted to the spouse or what he/she has inherited can be shared or not. Again, the example of a piece of jewellery can be used, because a piece of jewellery is usually worn by one person.
What can be excluded?
Often the items that are excluded from valuation for division of assets are things the parties have owned before they got married. However, one major exception to that is the matrimonial home: it’s irrelevant who owned it prior to the marriage it’s not an excluded item.
For example, in British Columbia some of the items that can be excluded are:
- Property acquired by a spouse before the relationship between the spouses began;
- Inheritances to a spouse;
- gifts to a spouse from a third party;
- a settlement or an award of damages to a spouse as compensation for injury or loss;
- a spouse's beneficial interest in property held in a discretionary trust;
- money paid or payable under an insurance policy, etc.,
Beware though that excluded property could be included if it becomes part of other family assets, such as the matrimonial home. It is also often the responsibility of the spouse who claims that certain property is excluded to show why it is so.
Also if there is a marriage contract between the parties that excludes certain property such things will likely be excluded.
If you have questions or issues with issues of gifts, inheritances and other excluded properties while you’re in the process of divorcing you should consult with a lawyer as soon as possible.
Property Division for Married and Unmarried Couples Alberta
How to divide property and debt British Columbia