Separation and my inheritance

[Popsicle Diver]

I have been with my partner for almost 9 years now. When I purchased my first house I was given a portion of my inheritance for the downpayment. The title was in my name alone. We both lived there for 4 yrs until I sold the property to move closer to the city. I took all of the money (profit and inheritance;it's value increased because of the investment)I made on that house and rolled it into this one, which we took title of as Tenants on Common. She has always maintained that she would never touch my inheritance and acknowledged at signing that she did not have equal title on the house as it was purchased with my previouse residence.
In this time she has a gambling and alchohol addiction that was under treatment for the last few years but has spiralled out of control at present.

The financial arrangement in both houses was that we accumulate the monthly bills and split it 50/50. That was fine when she hadn't gambled the money away and I had to paid the bills all myself to keep the house etc.

It is a much larger issue now because the house we are in costs 2.5 as much to run as the old house. I have been supporting the houshold solely since November 2005. Since then she has taken from the household line of credit to feed the gambling and the drinking is unbearable.

I will not be unfair to her in the dissolution of the house or its contents; my aim is to keep the house and pay her out her portion. She put a lot of 'sweat equity' into the house, while I paid for ALL of the renovations and supplies. I know 'sweat equity' is not 'reumbursable' but I consider it to be, and that is only fair in my eyes.
After that long explanation my questions are these:

- How does my inheritance factor into the disollution of assets considering it was all of MY house initially that has made our current morgage as little as it is. In hindsight I should have kept the mortgage as high as possible so as not to give her 'that' much money!
- once the division of assets is complete, what kind of liability will I be subject to, given that the gambling money came from a joint line of credit? I am willing to be responsible for the entire debt if I can subtract her value from the payout, but I don't want the LOC debt to be split equally because I will not be responsible for the gambling money.
-will she be held accountable for the fact that she hasn't contributed to the household for the last 8 mos straight, and sporadically prior to that?

What I would think would be reasonable is to:
take the closing value from my previouse house, figure out what percentage of this house it represents, subtract the current mortgage and my (again increased as an investment) inheritance, divide that total by two and start subtracting all her debts from her half. I would pay her the balance (if any), get her some furniture and wave bye bye..
Am I out of my tree?
Thanks a lot!
Worried in Brampton

[Jeff]

Hi Popsicle Diver and welcome to the forums!

The way property is divided in Ontario is pretty mathematical. You can see how it works here:
http://www.ottawadivorce.com/propertydivision.htm

Originally Posted by Popsicle Diver

- How does my inheritance factor into the disollution of assets considering it was all of MY house initially that has made our current morgage as little as it is. In hindsight I should have kept the mortgage as high as possible so as not to give her 'that' much money!

I'm not quite sure of the timing of the purchase of your first home - whether it was before or after your marriage. If it was before your marriage, you'll get a deduction for the equity you had in the house on the date of marriage.

Normally, inheritances are excluded from the division of property. However, if the inheritance is put into a matrimonial home, you lose this exclusion. So if you purchased your first house after your marriage, and you used inherited money to purchase it, the inherited money isn't going to be considered in dividing the family property. Yes, hindsight is 20/20 and you would have been better off not putting the inheritance into the matrimonial home.

Originally Posted by Popsicle Diver

- once the division of assets is complete, what kind of liability will I be subject to, given that the gambling money came from a joint line of credit? I am willing to be responsible for the entire debt if I can subtract her value from the payout, but I don't want the LOC debt to be split equally because I will not be responsible for the gambling money.

Not sure I understand the question fully. Assets and debts themselves are not divided. Instead, at the end of the day, one of you will need to pay the other an equalization payment. The joint line of credit should be paid off in full otherwise you could find yourself on the hook for it in later years. Either you'd both pay half of the joint line of credit or one of you would pay it all and the equalization payment would be adjusted accordingly.

In theory, you could apply for an unequal division of property on the ground that your partner gambled away substantial assets. If things go to court you would normally make that claim. However, you should be aware that actually proving it can be quite difficult - she's unlikely to admit that she gambled away the money and there's normally not much of a paper trail.

Originally Posted by Popsicle Diver

-will she be held accountable for the fact that she hasn't contributed to the household for the last 8 mos straight, and sporadically prior to that?

I'm not entirely sure what you mean by this, but I think that the answer is no. The property that exists on the date of separation will be divided as set out in the link above. You can claim an unequal division on the grounds that your wife has gambled away a lot of money. You *can't* claim an unequal division on the grounds that your wife hasn't paid for much around the home.

[Popsicle Diver]

Thank you Jeff for your detailed response; I should have stated that the relationship is not a marriage, but same-sex common law.
We never 'got married' even though we have fought for years for the right to. I am very glad now that we didn't.
Thanks, and sorry for the confusion..

[Jeff]

That changes things a bit. I guess posting in the common law forum should have tipped me off

In common law situations, there's no automatic division of property. You each would keeps what's in your name. You'd each be responsible for any debts in your name.

So, your partner would be entitled her share of the equity in the home.

You'd each be responsible for half the joint line of credit. If you're buying out her share of the home, you should probably insist she use that money to pay off her half of the joint line of credit.

If you're unhappy with that, you can make a claim for unjust enrichment - basically that she was enriched at your expense.

If you're not happy with the above, you could make a claim for unjust enrichment. That's where all the stuff like the inheritance, her not contributing, her gambling, etc. would be looked at.

You'd really need to do a cost / benefit analysis as to whether making such a claim is worthwhile. Without even going to trial such a claim can cost $20,000 to $30,000 in legal fees because of the detail that must be gone into as to each of your financial and non-financial contributions to the relationship over the course of 9 years.

As well, I'm sure your partner would claim she's done other things that have benefitted you that should be use to offset any of your claims, etc.

So, unless there's a large dollar difference between what you think is fair and what you are entitled to without making a claim for unjust enrichment, often it's best not to make the claim.