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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 05-15-2013, 09:27 PM
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Default 1 year marriage and bought a house. How can we minimize the damage?

Hi all,

Started dating in 2007.
Received a cash gift from my dad of 80,000. (It was part of an inheritance on his side, but it was a cash gift to me.)
Moved into an apartment together in 2010.
Got engaged summer of 2012 and married Sept 2012.
Shopped around for a house and made an offer ($286,000).
Offer accepted, closing date was January 2013.

The marriage is not working out - I have mental health problems and chronic anxiety. Long story short, the marriage is not working out.

We both earn about 55,000 each and I put 20% of the purchase price down with the money I had. I also paid closing costs. I probably spent about 60,000.

Due to these mental health problems I was forced to take a few months off work to try and get some help. So I'm looking to get se tranquility back into my life.

I am currently on EI Sickness Benefits and only have $500 to my name each month after medical bills....

There are some things I'm confused about and was wondering if anyone here might be able to help. My stbx is fairly easy to talk to. She's understandably upset, but she understands that my mental health has deteriorated too much to keep forcing something that isn't working.

I believe that even though we've only been married since September 2012, she will still get 50% of the matrimonial home, correct? So whatever we get for the house when we sell, minus commission and closing costs and less the mortgage owing, we would just divide that by two?

I was wondering if it makes more financial sense to list it ASAP instead of waiting until our one year anniversary, or if it really doesn't make a difference?

Let's say for whatever reason she changes her mind and does not agree to list it.
If I have to hire a divorce lawyer, would I have to pay that cost out of my own pocket?

I'd like to move on sooner than later so i can be settled in a new apartment before making an attempt to return to work.

We also bought a new car together in August under both our names. So we'll have to figure out what to do about that, but I figure it will be a lot less stressful than the house.

I forgot to mention: I don't have any of the cash gift left. Not sure where it all went... Dining room table, groceries... I paid the first property tax bill. I don't think we're the type of couple who would get down to the nitty gritty and try to nickle and dime each other... It's mostly the house I'm concerned about. If I can get back more than half because of how short the marriage is, great. If not, that's fine too.

Also. If she went after my pension, would the time we lived together as common law count, or would it only be the time spent married (from Sept 12 until now)?
If she went after it, could I go after hers? I assume we are better off just not even bothering with that... What would we gain? Nothing
Thanks all.

Last edited by rdm35; 05-15-2013 at 09:40 PM. Reason: Forgot to include some info.
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Old 05-16-2013, 09:23 AM
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The way equalization works, the money that you brought into the relationship is deducted from NFP when you split. The $80k will be accounted for that way. I am giving you a very simple description but you haven't completely "lost" your $80k. Just make sure you go to your bank and get statements that show you had the money before you married.

For marriage vs common law, it should work like this: Your CPP is under Federal legislation, she can apply to the government to have that split. It will be based on her own CPP, and you will each get half of the combined amount.

For company pension, she will get a split according to how many years you lived together. My understanding here is that once you marry, the time together goes back to moving in common law, and it removes the 3 year wait for common law. However, you should get some advice from a lawyer to confirm this.

As far as when to list the house, you may list it any time. List it when you think you will get the best return. Prices will probably be flatter in September for example. You don't have to wait a year; I am guessing you are thinking of the one year wait for the divorce order. You may settle all your issues whenever you are ready, then the divorce will be a separate order. If negotiations take longer then you may combine that agreement into your divorce order but it isn't required.

If you are agreeable on all counts, you don't need a divorce lawyer. I would recommend incorporating your separation agreement into your divorce order to give it legal weight. Otherwise, you should each get independant legal advice and have each of your lawyers sign the document with you. This doesn't have to be expensive, but you should be clear with your lawyers that you have settled and are not hiring them to negotiate a "better" deal.

You can do it yourself if you research carefully and do the math properly. You can ask all kinds of questions here. The thing to be careful of is making sure the agreement will stand up in court.
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Old 05-16-2013, 10:00 AM
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I put $57,200 towards the house (20%).
Does my wife automatically have a 50% interest in the house
regardless of who put money into it or how much?

I was thinking of waiting until our 1 year anniversary so I could get a divorce lawyer and possibly try to get more than 50%
of my down payment back.

I was still living on my own when my dad gave me the money, but I then got married a few years later and put 20% into the matrimonial home.
If the sale of the house MUST be divided equally, then we might as well just list it now.

I'm just thinking my chances of getting that 57,000 back are slim because I put it towards the house and its under both of our names
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Old 05-16-2013, 10:03 AM
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If the money is put into a matrimonial asset (ie house) it is NOT an exclusion from Net Family Property and becomes part of the equalization. So you will have to split the money you put into the house, you don't get all of it back.

Generally yes, your wife has an equal share in the value of the home. That's part of the deal when you marry and a special part of family law which is the main part that is different from common law relationships.
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Old 05-16-2013, 10:34 AM
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Quote:
Originally Posted by FightingForFamily View Post
If the money is put into a matrimonial asset (ie house) it is NOT an exclusion from Net Family Property and becomes part of the equalization. .
Where did you get this idea?
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Old 05-16-2013, 11:00 AM
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I thought I could subtract the money I received as a gift but i think since i put most of it into the matrimonial home I'll have to split it.
I wish there was a way I could get more, it's kind of unfair that she could get 25,000 bucks after only being married for less than a year.
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Old 05-16-2013, 11:07 AM
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Um, I am sure someone will correct me if I am mistaken, but my understanding is that the formula is assets on day of separation, MINUS assets on day before wedding. So if the downpayment was an asset in your bank account on the day before your wedding, its value is taken out of the pool of assets to be split.
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Old 05-16-2013, 11:24 AM
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Maybe I should see a divorce lawyer for a free consultation. I didn't want to pay additional fees, but... maybe I have a chance based on not being married long. Maybe I'm screwed. Now I'm really confused
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Old 05-16-2013, 11:27 AM
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Do the free consultation, even if you want to do most of the negotiarions yourself, you still want a lawyer to review your separation agreement before you sign.
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Old 05-16-2013, 11:29 AM
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DowntroddenDad is correct, I still don't understand where FightingForFamily got that idea.

Jamal, F. (2011) "Abolish the Special Treatment of the Matrimonial Home", Ontario Bar Association Journal

This is very complete explanation of the issues around the mat home, especially in a short marriage. It explains the exclusion of funds brought into the marriage, and suggests some workarounds for a short duration marriage. Especially pay attention to:
Quote:
So long as the marriage is of a duration of less than five years, s. 5(6) is available to redress the unfairness.
One argument in favour of the special rules is that, regardless of the way in which the home was acquired, both spouses usually make a substantial contribution to its preservation and maintenance either financially or through labour. If this is the premise underlying the special treatment of matrimonial homes, then "special" special treatment is required for matrimonial homes brought into short marriages and matrimonial homes inherited shortly before the valuation date. Adjustments to the equalization payment in these circumstances, which must meet the strict unconscionable threshold pursuant to s. 5(6) of the Family Law Act (and not simply on the basis of fairness), have been unsatisfactory.
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