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Division of property: Are cash divorce settlements taxable?

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On behalf of Laughlin & Company Lawyers, Mediators posted Division of Property on Tuesday, January 31, 2017.

When a married or common-law couple in British Columbia decides to go their separate ways, it may be wise for each party to retain legal counsel to provide guidance during negotiations. Division of property can be a complicated process, and ignorance of tax and other laws may have unanticipated consequences. An experienced divorce lawyer can explain the tax implications of any monetary offers made by the other party.

A woman recently asked a question about the tax consequences of accepting a cash settlement offer from her former husband. She wanted to know about her tax liability on such a settlement, and whether her ex could use it as a tax deduction. The Real Property Tax Act governs transfers of property between spouses, and the Canada Revenue Agency enforces it. Furthermore, the laws of the various provinces and territories vary with relation to equalization or division of marital property.

Any cash settlement offered for marital property or equalization will not be taxable for the receiver or tax deductible for the giver. The same will apply if it was offered as a lump sum payment for support. However, documenting any payment made during a divorce or separation is best recorded in a legal separation agreement.

This is a complicated field of the law, and securing the support and guidance of an experienced British Columbia divorce lawyer can prevent unanticipated complications. A skilled legal representative can explain the tax implications of any settlement amounts paid or offered during the division of property. The attorney can also document the payments in a separation agreement in a manner that complies with the requirements of all applicable laws.

Source: moneysense.ca, “Do I need to pay tax on my divorce settlement?“, Debbie Hartzman, Jan. 20, 2017

Family Lawyers in Coquitlam

Laughlin & Company Lawyers Mediators
2755 Lougheed Hwy #710, Port Coquitlam, BC V3B 5Y9
(604) 945-4370

Prenuptial agreements can prevent issues in division of property

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On behalf of Laughlin & Company Lawyers, mediators posted Division of Property on Thursday, January 12, 2017.

While conversations about prenuptial agreements used to be uncomfortable, more and more British Columbia couples find it the best way to protect their individual assets — not only in the event of a divorce but also if one spouse should die. Many couples marry a bit later in life, and others marry for a second or subsequent time, and they enter marriages with already acquired assets that need protection in the division of property. Furthermore, prenups are not limited to asset allocation but can include directives on how the couple will handle finances and more during the marriage.

The first requirement of a prenuptial agreement is a comprehensive list of each spouse’s assets that they will bring into the marriage — along with their existing debts. Any assets acquired after the wedding date will be a marital property that will belong to both. Spouses usually have different spending and saving habits, and they can use the prenup to set ground rules related to how they will administrate their incomes and assets. They can also stipulate how they will handle the payment of existing debt.

Matters other than financial, such as commitments and responsibilities with raising children and household tasks, can be addressed in the marital agreement. If one spouse advances his or her education while the other spouse works, they may want to consider the position of the person who put in hours at work in the event of a divorce. Similarly, potential spousal support may be included for one spouse who may become a stay-at-home parent and will be at a financial disadvantage if the marriage ends.

These are just some of the matters to consider when drafting a prenuptial agreement. Each spouse’s legal representative must be present to ensure both spouses sign the document out of free will and that no intimidation or coercion takes place. Experienced British Columbia family law attorneys can provide valuable advice and input during the drafting of the agreement to ensure the fair division of property should one spouse die or in the event of a divorce.

Source: Marriage.com, “Prenuptial Agreement Checklist“, Accessed on Jan. 7, 2017

Find a lawyer at Laughlin Law

Laughlin & Company Lawyers Mediators
2755 Lougheed Hwy #710, Port Coquitlam, BC V3B 5Y9
(604) 945-4370

Family Lawyer Coquitlam, BC

Division of property can do with appropriate help

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On behalf of Laughlin & Company Lawyers Mediators posted in Division of Property on Sunday, December 11, 2016.

Couples in British Columbia may not realize that the lasting effect of the trauma of a divorce can be lessened by taking proper care of themselves. Emotions and anxiety can be overwhelming during this time, and adequate rest, healthy eating, enough activity and both moral and legal support can ease the process. Along with issues related to child custody, the division of property can become contentious if not handled carefully.

It may be beneficial for a divorcing couple to work toward reaching agreements in negotiations to avoid stress over the high costs of litigation. Reportedly, most couples choose to jointly manage their finances by combining their incomes to pay both personal and household expenses. Upon divorce, they must separate their finances, and each spouse must evaluate his or her financial positions and assess any future needs.

However, most couples seem to work toward settlements through communication and compromise. Statistics show that about half of divorcing couples in British Columbia manage to avoid court proceedings — often even after one spouse started the process by going to court but then agreed to resolve issues. The percentage of couples who ultimately reach settlements through litigation is insignificant — only six in every 100 couples.

While some British Columbia couples choose to navigate their divorce proceedings on their own, many others have found that the support and guidance of a skilled divorce lawyer can be invaluable when it comes to the division of property.  Along with the legal advice that a seasoned lawyer can offer, he or she can prepare the client for what to expect. Such a professional can provide valuable input based on his or her years of experience to ensure a smooth transference into a new chapter of life.

Source: justiceeducation.ca, “Family Law Basics“, Accessed on Dec. 9, 2016

Lawyers in Coquitlam, British Columbia

Laughlin & Company Lawyers Mediators
2755 Lougheed Hwy #710, Port Coquitlam, BC V3B 5Y9
(604) 945-4370
www.laughlinlaw.ca

Protect combined funds during the division of property

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On behalf of Laughlin & Company Lawyers Mediators posted in Division of Property on Sunday, November 20, 2016.

When British Columbia couples get married, many changes take place in the lives of both parties. Along with having to get used to each other’s habits and ways of life, the unique financial profiles of two entirely different people are combined — often with the little prior discussion. Finances are blamed for many arguments in marriages, and if these issues are left unaddressed, it may even lead to divorce. What makes decisions about combining funds difficult is the fact that couples who are very much in love must also consider the possibility of divorce and division of property in those proceedings.

Although the dynamics of each couple are unique, a professional financial advisor says that allowing each spouse to maintain some economic freedom may avoid serious arguments. Some prefer to have their separate accounts with an arranged list of financial obligations for each spouse. Others find that a “yours, mine and ours” system works best for them. This allows each partner a personal account and some independence while they pay household expenses from a joint account.

Another option that works for some is for each spouse to be allotted a weekly or monthly amount of money — similar to an allowance — to do with as they please. Spouses can use this to treat themselves or to treat each other with a special gift or surprises. In cases in which one spouse tends to be a spender, this may be an effective way to control such habits without making it feel like punishment.

While each couple can work out a financial strategy that works for them, it may be wise to record the arrangement in a prenuptial agreement. This may avoid contention during the division of property in the event of a divorce. The assistance and experience of a British Columbia divorce lawyer to provide advice can prove to be invaluable.

Source: businessinsider.com, “Here’s how to combine your money when you get married, according to a financial planner“, Tanza Loudenback, Accessed on Nov. 18, 2016

Lawyer Coquitlam, British Columbia

Laughlin & Company Lawyers Mediators
2755 Lougheed Hwy #710, Port Coquitlam, BC V3B 5Y9
(604) 945-4370

How do the British Columbia courts handle division of property ?

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On behalf of Laughlin & Company Lawyers Mediators posted in Division of Property on Thursday, November 17, 2016.

Dividing property in a divorce or separation of common law partners may sound like a simple process. However, in real life, it is a stressful and emotional process and could be as difficult to navigate as child custody issues. In British Columbia, laws related to the division of property apply to married spouses and common-law couples who have lived together as spouses for two years or more.

For the process of equal property division, certain assets do not qualify. The excluded property typically comprises everything each partner brought into the marriage or relationship. Also excluded are inheritances, gifts, and awards for damages. However, if, for example, one partner owned the family residence before the couple moved in together, that person will be entitled to the value of the property before they got married or became a couple. In the event the marriage or relationship ends, the partners will share the amount by which the value of the house had increased over their time together.

In contrast, if a couple purchased a family home during the marriage or common-law union, it will be considered the marital property to be divided. The couple can sell the house and share the profits, or one partner can buy the other’s share and keep the residence. In addition, Registered Retirement Savings Plans, investments, and bank accounts will be shared equally, along with pensions, insurance policies and business interests.

Couples may negotiate a property division plan and present it to the court for approval. If they fail to come to an agreement, the court will determine the division of property. However, couples may be proactive and sign agreements such as prenuptial, postnuptial or cohabitation agreements to protect the interests of both parties in the event a relationship does not last. To ensure such agreements comply with legal requirements in British Columbia and will hold up in court, the guidance of an experienced divorce lawyer may be necessary.

Source: gov.bc.ca, “What happens to family property when spouses separate?“, Accessed on Nov. 11, 2016

Coquitlam Law Firms

Laughlin & Company Lawyers Mediators
2755 Lougheed Hwy #710, Port Coquitlam, BC V3B 5Y9
(604) 945-4370

How is division of property handled in common-law break-ups?

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On behalf of Laughlin & Company Lawyers Mediators posted in Division of Property on Wednesday, November 2, 2016.

Residents of British Columbia who have been in common-law relationships for two years are regarded by law as the same as married couples. However, they may not be aware that it is not the case in other provinces. In fact, the laws related to cohabitating couples vary from province to province. In the case of such a relationship ending in British Columbia, the division of property will be handled according to the same laws as those covering a divorce.

In a common-law break-up in this province, assets acquired during the period of cohabitation will be divided equitably between the two parties. Assets owned by one party before the couple moved in together will remain that person’s property — unless the value of that asset was increased during the common-law relationship, in which case the growth amount will be divided. How will the property be divided if a couple who has lived together under British Columbia laws relocates to another province and then the partners decide to go their separate ways?

Even if domestic partners meet the requirements of their province to be recognized as common-law partners, this will have no impact on the division of property in the event of a break-up. In any other province, a partner must prove ownership of any assets he or she claims after the end of a relationship. This is required except when the couple signed a legal cohabitation or other agreement, which will determine how the property will be divided.

Common-law partners in British Columbia may benefit from each consulting with an experienced divorce lawyer who can explain the applicable laws and assist with the drafting of a cohabitation agreement, if necessary. This will provide protection of each party’s interests during the division of property in the event of a break-up. The court typically requires such an agreement to comply with applicable laws, and the legal counsel of each party must have been present during signing to prove neither party signed the agreement under duress.

Source: CBC News, “4 myths about common-law relationships“, Alexandra Kazia, Accessed on Oct. 29, 2016

Law Firms Coquitlam

Laughlin & Company Lawyers Mediators
2755 Lougheed Hwy #710, Port Coquitlam, BC V3B 5Y9
(604) 945-4370
https://www.laughlinlaw.ca/

How important is it to stay organized during divorce?

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On behalf of Laughlin & Company Lawyers Mediators posted in Division of Property on Tuesday, July 26, 2016.

While you don’t need to start color-coordinating your files or rush out for a few label makers, making a concerted effort to stay organized as you move through the divorce process can make it much easier and less stressful. Here are three tips to get you started.

1. Establish a central location for all divorce-related paperwork. If you have a home office, this is a good spot. If not, look for a flat surface where you won’t have to move things out of the way — your dining room table isn’t a good choice — and that’s close to a calendar and wherever you make most of your phone calls. Having everything in one place means that you can easily access any information your attorney needs without having to spend the day searching.

2. Document everything. Documentation is key to any legal situation, but it’s especially important in divorce cases when your personal and home life is bound to be in a bit of disarray. Get in the habit of keeping a journal where you can write down when you talk to your ex and the topic of conversation. This can also be a place to write down questions for your next meeting with your attorney so you don’t forget.

3. Get your own mailbox. Whether you or your ex is the one moving out, right now both of you are likely getting mail and other important documents delivered to the house. Getting a post office box can ensure that you have a way to communicate without worrying about your ex-intercepting anything. If you currently use a joint email account, you’ll want to establish your own immediately.

If you have questions about what you should be keeping track of, ask your lawyer. By being able to access and provide him or her with needed documentation, you can help make the process a little easier.

Source: Forbes, “Why Women Who Are Organized Often Do Better in Divorce,” Jeff Landers, accessed July 26, 2016

Coquitlam Family Lawyers

Laughlin & Company Lawyers Mediators
2755 Lougheed Hwy #710, Port Coquitlam, BC V3B 5Y9
(604) 945-4370
www.laughlinlaw.ca/

How is pet custody determined?

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On behalf of Laughlin & Company Lawyers Mediators posted in Division of Property on Monday, June 6, 2016.

While many couples going through a divorce disagree on matters of child custody and parenting time, a new type of custody case has been coming before the courts more and more: pet custody. If you or your soon-to-be ex-adopted pets during your relationship, it can be tough to decide who gets to keep which animals. However, it’s important to understand that the courts are very limited in what they can order when it comes to pet custody and visitation.

In most cases, pets are considered part of the marital property, which means the regular property division guidelines apply and they are not subject to things like custody and access. Like with other assets, the judge will be able to grant one party ownership of the pets and order that party to pay the other half of the pet’s value, but that’s all.

There have been some cases in the past, however, where a judge did give a specific order involving a pet custody case, so it is possible. It may be better, though, to try to work out an arrangement that is agreeable to both parties and then talk to a lawyer to see if it can be made part of the official divorce settlement.

As a last note, it’s important to understand that much of this only works in official property division settlements subject to a legal marriage and divorce. If you are not married to your partner or are unsure if the property division guidelines apply, it may be best to talk with a lawyer before moving forward.

Source: FindLaw, “Who gets custody of the family pet when a couple separates or divorces?,” Miriam Yosowich, accessed June 06, 2016

Real Estate Lawyer Coquitlam

Laughlin & Company Lawyers Mediators
2755 Lougheed Hwy #710, Port Coquitlam, BC V3B 5Y9
(604) 945-4370

Can property you buy after the separation be martial property?

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On behalf of Laughlin & Company Lawyers Mediators posted in Division of Property on Tuesday, May 31, 2016.

Property division can be extremely complex, and there are many misconceptions about what is or is not marital property and therefore subject to the divorce settlement. While many people are aware that the property that either spouse bought during the course of the marriage may be considered marital property, they may not be aware that property bought after the separation date may also be subject to British Columbia’s property division guidelines.

While it may seem counterintuitive that property you buy you and your ex are already separated can be marital property, it is very possible. The determining factor is what funds you use to make the purchase. If the funding for the purchase comes from marital property, such as a joint bank account or monies from selling marital property, the item purchased can be considered part of the divorce settlement.

The best way to ensure that property you purchase during the separation period is not included in your divorce settlement is to make it very clear that no marital funds or assets were used. Money from a single bank account where only your income is deposited would be a good source. Funds that are excluded from marital property division, such as inheritances or gifts from a third party would also likely be safe.

If you are planning on making any large purchases during the separation period or have questions about property division, it’s important to get information from an experienced lawyer in British Columbia. Understanding how the courts are likely to assess your assets makes it easier to protect your financial interests.

Source: BC Laws, “Family Law Act Part 5 — Property Division,” accessed May 31, 2016

Real Estate Lawyers Coquitlam

Laughlin & Company Lawyers Mediators
2755 Lougheed Hwy #710, Port Coquitlam, BC V3B 5Y9
(604) 945-4370

Getting a better divorce settlement

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On behalf of Laughlin & Company Lawyers Mediators posted in Division of Property on Friday, April 22, 2016.

While a divorce is often a very emotional process, many people are more prepared to deal with the anger, disappointment, and frustration of ending a relationship than boiling down their marriage into a list of debts and assets. However difficult it may be, the divorce settlement is one of the most important aspects of the divorce, and there are some things you can do to set yourself up for success.

Before you begin thinking about what you want out of the divorce, or even whether you want to go the traditional route or take advantage of the collaborative process, it’s important to talk with a lawyer. Realistic expectations and goals are important, and having a consultation can help ensure you are fully aware of what you are entitled to and your legal options to pursue it through the courts.

A key part of the process is to establish a team of experienced professionals who can guide you. For example, it’s common for parties going through a collaborative divorce to have financial experts who can help them better understand what their assets are worth, what a fair settlement may be and the property division options. Even though child custody and property division are separate issues, it’s important to consider the expenses related to the children in the settlement process.

Whether you are already in the midst of an adversarial divorce or curious about the collaborative process, talking with a lawyer in British Columbia is the first step. After your initial meeting, you will be more informed and better prepared to start making decisions.

Source: MoneySense, “How to get a better divorce settlement,” April 13, 2016

Coquitlam BC Law Firms

Laughlin & Company Lawyers Mediators
2755 Lougheed Hwy #710, Port Coquitlam, BC V3B 5Y9
(604) 945-4370