can one of the parties to a property settlement dispose of their interest in an asset prior to reaching an agreement?
what happens if the other party is depleting the matrimonial pool of assets?
The quick answer is yes, but you need to notify the other party to the settlement. Rule 13.04 of the Family Law Rules states that when disposing of property in the twelve months immediately prior to separation, or at any time since separation, the party disposing of their interest must provide disclosure of such disposal to the other party. In simple terms this means that if you dispose of any property, by way of sale, transfer, assignment, or as a gift to someone else, you have to notify the other party.
Notification can take place by producing documents, for example a sale agreement, or by simply disclosing the information, or just by answering specific questions. Rule 13.01 simply requires that all parties give “full and frank disclosure of all information relevant to the case, in a timely manner”.
Take note: The law does not say that you are not allowed to dispose of property in that time period, it simply says that each party must provide ongoing disclosures of relevant transactions to keep the other party fully informed and up to date on any disposal of assets.
If the other party is in effect lowering the value of the matrimonial assets by disposing of the property without receiving proper value in return, it can become an issue. If, for example, your spouse transfers his/her interest in an asset for less than market value, it can deplete the value of your joint pool of assets. What can you do in that situation?
In such a situation you can lead evidence in court to prove that the transaction caused a shortfall and you may ask the court to take the value of the shortfall into consideration when calculating the property division. The court has a discretion to “add” the amount of the shortfall back to your spouse. The court may even go a step further and note the party who is disposing of the property as having “wasted” the asset. This can be taken into account when the court calculates a “just” split of the property.
Get legal advice
It can sometimes be vitally important to prevent an asset from being sold or otherwise dispose of. If you are concerned that your ex-spouse might transact with assets in a way that could deplete the value of your joint asset pool, contact a family lawyer as soon as possible. You can discuss the transaction and the possible implications on your property settlement with a lawyer who has experience in this field.
Disclaimer : This article provides basic information only and is not a substitute for a professional or legal advice. It is prudent to obtain legal advice from a family lawyer.