Assets and liabilities family property dispute
All assets and liabilities, including business and trusts that benefit a spouse, are part of the property pool to be divided when a couple divorces.In most cases, all of assets and liabilities are included in the property pool. A property settlement divides those assets and liabilities.
All assets and liabilities are included in the property, not just those that were acquired during the marriage. Property and debts that were brought into the marriage and those that were acquired after the marriage are added to the property pool. How the property pool will be divided depends upon some factors that are discussed in other articles on this website.
Property can be classified into three groups: real property, personal property, and financial assets. They are all included in the property pool.
Real property refers to land and the buildings that are attached to it. The family home, a vacation home or condo, and the buildings that a spouse owns for the operation of a business are examples of real property.
Personal property includes all nonfinancial forms of property other than real property. Cars, motorcycles, boats, jewellery, art, furniture, appliances, computers, tools, collections, and business equipment are all examples of personal property.
Financial assets include cash and investments. Funds held in bank accounts, stocks, bonds, money that is owed to a spouse, and money that will be paid as the result of a lawsuit are examples of financial assets. So are pension or retirement accounts and superannuation interests. Trusts can also be considered as financial assets.
Liabilities are the debts you owe. Those can include mortgage notes, credit card debts, and other bills you owe, including unpaid taxes. Responsibility for payment of debts is determined as part of the property settlement.
Sometimes a spouse will arrange for his or her assets to be owned by a company. A spouse might therefore have the use of a company car that is not titled in the spouse’s name.
When making a property settlement, a Family Law Court can look beyond the legal title to determine, as a practical matter, whether a spouse has exclusive control of an asset. Ownership can be attributed to a spouse even if the asset is titled in the name of a company.
Family Law Courts can take other steps when a spouse uses business to shelter assets. In an appropriate case, the court can transfer shares of the company from one spouse to the other. That could have the practical effect of transferring control of the company from one spouse to the other. The court might also remove a spouse as the director of a company, limiting the spouse’s ability to control the company’s actions.
Trusts are often established by parents or grandparents for the benefit of their children. Assets that are held by a trust belonging to the trust, even if the income produced by those assets is distributed to the trust’s beneficiaries.
Trusts contain provisions for the distribution of trust assets when the trust comes to an end. Future distributions that a spouse will receive from a trust can be included in the property pool.
In some cases, a spouse will create a trust and then transfer property to the trust to shield it from a property settlement. When that happens, a Family Law Court may be able to circumvent that plan by including trust assets in the property pool.
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.