Personal accounts considered joint?

[YYZDaddy]

Hello,
In an initial draft Form 13.1 Financial Statement (Ontario), I've listed my credit card, line of credit and vehicle all as 100% mine. This is causing my Net Family Value to be MUCH higher than I think is realistic, and Ex's to be much lower.

Questions:
1) For my Credit Card - The DOM value is high, as I had a lot of debt when we got married, which has since been paid off. This debt was largely wedding related and purchased related to the home we were both living in (for 5 years prior to the marriage). Some purchases were made on a Spousal card attached to this account. Is there an argument to make this debt joint, or distributed between both of our Financial Statements?

2) We purchased a vehicle on a Line of Credit during our marriage. Both are in my name, however, it was used as a family vehicle. We didn't have a second vehicle. Can this be considered a shared or joint asset?

3) My RRSP is the only source from which I can pay an equalization payment. If I withdraw from my RRSP to pay her, I'll have to pay close to 50% on it as a result. (Example: If I owe her $20,000, I'll have to withdraw close to $40,000 from my RRSP to pay the deferred tax).

Can anyone offer any guidance here? My lawyer seems to be acting very passively, like he just wants to pay and close the file. Before going to another lawyer, I would like to know if there's a reasonable argument here.

Thanks in advance!

[shellshocked22]

With respect to paying her via your RRSP. Double check with your lawyer (btw sounds like you might want to get a better lawyer) and accountant but you should be able to "transfer" funds from your RRSP to her RRSP without triggering tax on your end. Of course, SHE will then have to pay tax when/if she cashes it in.

BUT, if she doesn't need the $$ now, might be in her best interest to have it compound tax free AND if she has a lower tax rate, although you might have to pay 50% maybe she's in a 30% marginal tax rate. If she doesn't need it right away, maybe she can draw it down over a few years to minimize tax hit. Your wife's plans for the money plus your accountant can help you.

Don't underestimate how valuable a GOOD acct is, lawyers tend to know zip about tax laws....

[Mess]

RRSP: Yes, you can transfer the RRSP to her tax free. If her marginal tax rate is estimated to be 30% compared to your 50% then it works like this. Say you owe her $20,000, you would transfer $26,000 from your RRSP, instead of withdrawing $40,000. It doesn't matter what her marginal rate will be at retirement; you calculate this based on the assumption she will cash it in tomorrow, that is, what is the after tax value for her right now.

Regarding the credit card, the debt incurred on the spousal card should certainly go on her side of the ledger. The debt on your card cannot be arbitrarily made joint. If the card was used to purchase items with enough intrinsic value that they will be included in the equalization, then you have an argument that the debt is at least partially joint.

To explain, you bought a nice couch on the credit card for $1000, and some matching chairs for $500 each. For the equalization, she decided she wants the couch, you like the chairs, so this is a fair split. However it's not fair if you absorb the full debt for the purchase.

This is a touchy thing to argue, you need to be meticulous in detailing where the money was split.

In most situations there is no way to transform your debt into joint debt, you have to make a case for it by showing factually where the money went and showing factually that your ex is walking away with some of the benefit of that debt.

If the debt went to restaurants and cabs, you are out of luck.

Regarding the vehicle, you can't cut it in half. The vehicle and debt are in your name, it is your vehicle and debt.