Love and legalities — law and estate planning for a matrimonial home
Under the Family Law Act, when a marriage ends, we assess the value of each spouse’s assets and debts at the time of separation (known as the valuation date) and at the time of marriage. This helps us figure out each spouse’s net family property.
The goal of the law is to measure how much has grown during the marriage and share it equally. This applies only to married spouses.
There are exceptions for inheritances or gifts from third parties during the marriage, but the most important exception is for a matrimonial home. This is the property where the spouses usually lived during the marriage and is often the most valuable asset someone owns.
Unlike other assets, where a spouse gets credit for the value they brought into the marriage, this isn’t the case for the matrimonial home if it’s still the same home at separation. If a spouse owned the property before marriage and it became the matrimonial home, the other spouse is entitled to share its total value, not just the increase in value, when the marriage ends. The only way to protect this asset is with a marriage contract.
This also matters when making a will. If a spouse solely owns the matrimonial home, they might allow the other spouse to live there after their death, until they no longer want to or until they pass away. This is known as a life interest.
Many people think this is enough to protect their estate from any claims to the property, but it isn’t.
According to the Family Law Act, when a spouse dies with a will, the surviving spouse can choose to accept what’s in the will or to make a claim for equalization. This choice must be made within six months of their spouse’s death. If the spouse chooses equalization instead of taking what’s in the will, the life interest set out in the deceased’s will won’t be enough to protect the matrimonial home, even if the deceased solely owned it.
If a spouse wants to protect a home they own, which may be a matrimonial home, they should consider making a marriage contract. They can still allow the surviving spouse to live in the home until their death, but the asset won’t be divided through equalization and can be given out according to the deceased spouse’s wishes.
This article was originally published by The Hamilton Spectator.
