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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 10-15-2016, 12:39 PM
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Default Equalization Question

When it comes to the equalization calculation is it better to have assets or liabilities on the date of marriage? My ex is claiming liabilities of $150,000 which he did not have, so it must be better for him (or he wouldn't have done it) - I am not sure about the math. Can anyone explain? Thanks
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Old 10-15-2016, 11:06 PM
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At the beginning of a marriage, it is better to have assets and no liabilities for a more advantageous equalization.

At the end of the marriage, it is better to have liabilities and no assets for a more advantageous equalization.

Perhaps your husband is claiming $150,000 in liabilities on the date of separation? As an alternative, perhaps your husband is clueless? I would not educate him. Let him fill in his financials, swear to their truth, and then hit him with the calculation.

My brain is a little fuzzy tonight, but I'll try to run through a calculation. If I'm wrong others will rapidly jump down my throat so you'll get a correct answer one way or another

Let us assume you have a house that you will sell for $600k in cash. Assume you have no other assets or liabilities. The net worth of the family has gone from zero to 600k, so you would each get $300k. However, he is now claiming that he started off with a debt of $150k. That means that the net worth of the family increased by 600+150 = 750k since the date of the marriage. This is split $375k each.

He started at negative 150k, so he gets -150+375 = 225k in cash.
You started off at zero, so you get 375k in cash.


Now, if he has a 150k liability at the end of the marriage, that is different. the net worth of the family has increased by (600-150) = 450k, so an increase of 225k each.

You get 225k in cash
He gets 375k cash and 150k debt for a total of 225k

I probably could have set that up better, hope you can follow.
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Old 10-16-2016, 12:12 AM
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Hey Catherine - best advice is to go see a lawyer who specializes in family law and/or an accountant. Usually a good lawyer works closely with an accountant.

There are some quirky differences in some provinces regarding matrimonial property.

When dealing with the largest asset of your portfolio you shouldn't rely on advice from a public forum.

Good luck
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Old 10-16-2016, 02:24 AM
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Not challenging at all Arabian, just wondering what the quirky differences are?

Are my calculations wrong? Does it matter which province?
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Old 10-16-2016, 12:37 PM
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Actually, it has taken me some time to figure out exactly what he is doing with the Financial Statement - he hasn't listed any assets or liabilities on the date of marriage throughout the document but then in the summary table (Form 13.1 Part 6 Line 25) he has assigned himself a Value of All Deductions amount of $152,258.72

This amount corresponds exactly to his liabilities on the Value Day.

Therefore, he has claimed an entitlement to half of the house, without any deduction.

Unfortunately I do not know what to do - in order to make my Financial Statement match his I will have to do the same thing - but I do not feel comfortable swearing the statement.

We have court on Tuesday, so any suggestions would be helpful.
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Old 10-16-2016, 12:48 PM
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I should explain it this way.

He is claiming an asset of $152,358.72 on the date of marriage - with absolutely no documentation of any kind

This exactly offsets his liabilities on the date of separation, therefore, there is no money deducted from his half of the sale of the house.

Because I have been honest in the preparation of my Financial Statement, I will wind up owing him a lot of money, it seems.

What should I do? Any ideas? I have booked a Motion for Disclosure on Tuesday as I didn't have a Financial Statement at all when I booked the motion - now they have given me the Financial Statement but it has the situation described above.
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Old 10-16-2016, 02:08 PM
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He needs to actually provide evidence. If he refuses to provide that evidence and stands by those numbers, then you have to go to trial. If he refuses to provide that evidence at trial the judge will rule that he is lying, and it will go away.

You can write anything you want down on the piece of paper, it doesn't make it true.

No point in arguing. Do a calculation with the numbers that have evidence, ignore the numbers that are likely false, then send an offer to settle on the numbers that you believe are correct. He either accepts the offer or you go to court and win and then he gets the offer anyway and gets to pay for your lawyer.
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Old 10-16-2016, 08:05 PM
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Default Motion for Disclosure - details needed - what can I ask for?

Thanks for your help. We are to go to court on Tuesday. I brought a Motion for Disclosure as they were not providing me with the documents (i.e. tax returns for 2014 and 2015 and notices of assessment, or a Financial Statement without mistakes).

They have given me the tax forms but the Financial Statement is still incorrect.

As I said, he is claiming $150,000 in assets at the date of marriage without documentation.

This amount exactly offsets the liability amount to be deducted from the sale of the matrimonial home.

I am not sure what to do - what happens at a Motion for Disclosure?

Can I have the judge order him to fill out the form correctly (that is what I have asked for)?

There is something fishy about the way he has calculated the amount of tax he has paid but I haven't figured it out yet (he has listed all the tax amounts he owed on the date of separation - but none on the date of marriage - and he has 4 different tax years listed - so I am not sure how he has calculated it. Quite clearly, he is trying to bolster his position in the equalization calculation.

Please let me know if you have any ideas.

This forum is great, by the way. A huge wealth of knowledge!
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Old 10-16-2016, 08:23 PM
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Quote:
Originally Posted by catherine212 View Post
As I said, he is claiming $150,000 in assets at the date of marriage without documentation.

This amount exactly offsets the liability amount to be deducted from the sale of the matrimonial home.
Okay, this part is less confusing now. It's right to subtract assets at date of marriage from assets at date of separation. The goal is to have both spouses walk away with an equal increase in net worth. But he does have to provide documentation, as best he can, for these assets. Does his financial statement give any clue as to what they are?

Savings account? There should be a statement from his bank attached.
RRSPs? There should be a statement from his investment company attached.
Owned a business? There should be a business balance sheet or something attached.

Surely you have some idea of what he owned when you got married.

If those assets aren't sufficiently explained with backup documentation for you to understand them, then ask that they be removed from his financial statement. Then, they do not get subtracted from his net worth at date of separation.
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Old 10-17-2016, 06:44 AM
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Default Documentation for Financial Statement

No there are no documents stating any assets at the date of marriage - the entire document is a column of zeros until you get to the table that aggregates the totals for assets and liabilities on the date of marriage (Part 6 line 25) - there he puts in $150,000+ which is then carried over to the final page where there is a net family property table.

As well, he is a self-employed architect - freelance really - no staff, no office - he insists that there is no value to his practice but will not provide a letter or document from an independent third party backing up this statement. Isn't he obliged to provide proof that there is either value or no value? So far it is only his word - he says he doesn't want to spend the money to have it valued when there is no value - how do I respond? Any ideas?
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