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  • NFP calculation

    Hi all,

    For Net Family Property calculations, a couple of questions:

    1. Do you have to list RRSPs/retirement savings that were in place before marriage?

    2. One has accused the other of incurring $25000 on credit cards over the course of 2-3 years (which subsequently was rolled into a joint mortgage renewal after separating/date of valuation). Who, if anyone should list that debt, or does it even classify as debt?

    The $25000 could be debated, and was not incurred on "wild expenses" like big trips, jewelry, etc, it was mostly meals, gas costs and occasional small purchases, and spent before separation. The amounts were spent during a time when one spouse was staying with friends before separation - and no intent to separate had been declared.

    Other possibly-relevant information: Marriage date to Separation Date, approximately 6 years (2006 - 2012); The credit cards were in one spouse's name, with the other (spending spouse) as an additional card holder.

    Looking more for best practices or rules, as opposed to opinions.

    Regards,
    nat

  • #2
    You include all the above in the math.

    Comment


    • #3
      You include all assests before marriage and then those assets are deducted at the end. There is place on the financials towards the end of the calculation. What you brought into the marriage is not included in your worth to be split, but needs to be disclosed.
      Any debt before separation (that is why the separation date is important) is joint debt.

      Comment


      • #4
        The increase of the retirement account is split though, you subtract the value at time of marriage.

        All debt before separation is joint debt. That's marriage.

        Comment


        • #5
          Agreed billm any increase in value of that asset is split, but the principle amount that existed when you enter into the marriage is deducted and not shared.
          Serene is correct that all is included in the math, BUT she forgot to mention that the principle amount is deducted. Been there, done that.


          What happens after separation, debt rolled into mortgage etc. is not the issue. It is the debt that existed on the separation date. If one spouce has moved out and can prove it---then it may not be considered joint debt. It will then not go into the financials and be the responsibility of the person who incurred it.
          Last edited by momforever1956; 05-19-2014, 10:43 AM.

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          • #6
            Have both parties agreed on a separation date? This would make a big difference in determining whether credit card expenses incurred while one spouse was living with someone else are expenses incurred during the marriage or after it.

            (I would say that the amount involved - $25 000 for food, gas and "small purchases" - sounds to me like the spouse in question was living separate from the other spouse for an extended period, and that therefore this expense was incurred after separation. But this is only an opinion, and obviously I don't know the details).

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            • #7
              You list EVERYTHING. You have to provide FULL financial disclosure of your situation then and now. But assets and debts from before the marriage get subtracted again later.

              You calculate your net worth at date of marriage. You calculate your net worth at date of separation. Everything in YOUR name goes in. Any joint assets or debts that are in both your names, you include half the amount. You put this on your financial statement and present it to the ex.

              Your ex does the same. (Don't just take their word for it though, double check everything on it!)

              Equalization makes sure that you each end up with the same increase (or decrease) in net worth after you separate.

              So say you were worth $50k at marriage date. Owned a car, had some RRSPs, a bit of savings, not much debt.

              Say your ex was worth $10k at marriage date. Didn't own much, or had some student loans, whatever.

              Now say you are worth $80k at separation. Now there's a house to divide, and the RRSPs are worth more, and you have a pension now, but there's also some credit card debt.

              Say your ex is now worth $70k at separation. The student loans have been paid off, there are RRSPs and a pension now, and the other half the house.

              You went up $30k and your ex went up $60k over the course of the marriage. That's a total increase of $90k over the course of the marriage, or $45k each. You want to arrange the division of assets and debts such that you walk away worth $95k and your ex walks away worth $55k.

              This is a bit simplified as there are exemptions and special circumstances, but overall, that's how it's done.

              One thing that it took me a long time to wrap my brain around is that the law usually considers a married couple to be one unit. So it doesn't matter if one spouse ran up debt the other didn't know about or approve of - it is perceived that the married unit ran up the debt.

              I would say there are two ways to deal with the $25k debt issue. You could argue against the married unit thing. It's been known to work but could cost a lot in court and not be worth it. You could also argue to change the separation date. If you were living separate and just hadn't been told of your ex's intent to separate, you might be able to argue using the earlier date, before the debt was incurred, especially if the spending pattern was a sudden change.

              Comment


              • #8
                Rioe, it sounds like the debt was incurred by the OP .
                The party that was living at a friend's house will say the separation date happened when they moved in with a friend, that was when the debt happened. It just sounds like the OP will say-there was no discussion of separation and the debt was for everyday living and the separation date happened after the bills came flying in and not when one partner went to live with a friend.
                Separation date is the key point and once that is established then the debt can be assigned to one or both.

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                • #9
                  Hi all,

                  Thank you for your time and answers! Ultimately, we are both looking to make things work, especially for the children and try to avoid the expensive route. Time will tell.

                  Comment

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