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What exemptions can be claimed when dividing matrimonial property during a divorce?

One of the frequent questions that clients ask Calgary divorce lawyers when they are going through a divorce is: Does all the property have to be divided equally?

Matrimonial property is the property that the parties acquire during the course of the marriage. It is irrelevant whether this property is registered in the sole name of a party, or in the joints names of the parties. Matrimonial property is, in most circumstances, divided equally between the parties.

However, certain property is exempt from distribution. Such property is:

a) Property acquired by a party prior to the marriage;

b) Property acquired by a party by gift from a third party;

c) Property acquired by a party by inheritance;

d) An award or settlement of damages in tort in favour of one party; and

e) The proceeds of an insurance policy that is not insurance in respect to property, for a loss to only one of the parties.

For property referred to in a) to e) above, it is the value of the property as of the date of receipt that is exempt. If the property appreciates in value between that date, and the date of separation or trial, the appreciated value may be distributed, although it may not be distributed equally.

To claim the full extent of the exemption, it is very important that the party to whom the property belongs does not "mix" the property with other non-exempt property and/or transfer such property that was previously held in their sole name, into joint names. A common example of this is a house that was acquired by spouse A prior to them meeting spouse B, and held A's name, being transferred into the joint names of A and B after the marriage. Should A elect to do this, a large portion of the exemption is automatically lost to A.

Even prior to divorce or separation, clients are best advised to discuss their anticipated handling of exempt property with a divorce lawyer before dealing with such property, so as to ensure that they are fully informed of the potential consequences of their actions.

If you would like to discuss any questions you may have regarding the above with me, or if you wish to discuss any issues relating to divorce, separation, child support, spousal support, custody and access, guardianship and parenting, and division of property, please email me here, or call me on 403-538-2105.

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