Division of LIRA's

[Anne]

Just wondering what the law says around division of LIRAs.

In this situation, a spouse terminated from his place of employment (where he had worked for approximately 5 years) and rolled pension monies from a defined benefit pension plan to a LIRA. He had been married for approximately six months when this happened. The LIRA continued to earn interest and build an increased commuted value.

The couple separated six years after the LIRA was established.

When it comes to division of assets, would the LIRA be considered in this mix? Although a large percentage of the original roll over amount was prior to marriage, the interest and increased commuted value accrued between the date of marriage and the date of separation.

I would assume that the interest and increased differential in the commuted value at the date of separation would be the appropriate way to base division, but the other side's lawyer is maintaining that because the original asset was earned pre marriage (except for the 6 months), that it should not be divisible.

Any info would be greatly appreciated. The FSCO site is convolute and does not answer the question.

Thanks.

[Jeff]

A LIRA is treated just as any asset would be.

So, in this case, you'd need to include the value of the LIRA on the date of separation in your net family property and deduct the value of the pension on the date of marriage from your net family property.

The value of the LIRA on the date of separation should be fairly straightforward to find out directly from the bank or other financial institution. You'd also be entitled to some sort of notional deduction for future taxes. This would normally be in the 20 to 25% range, depending on your expected retirement income.

The value of the pension at the date of separation would need to be determined by an actuary. In an amicable situation, it may be possible just to agree on a value (say, something a bit less than the value when the pension was rolled over into the LIRA). But, I'd at least double check with an actuary as to whether that makes sense to do unless the amount of money involved was fairly small.

I'm not sure where the confusion of the other lawyer lies. Basically, the Ontario property regime shares the *increase in the value* of a couple's net worth during the marriage. This can include property owned on the date of marriage. There are exceptions to this - such as gifts, inheritances and personal injury awards. As well, the matrimonial home is treated a bit differently.

[Anne]

Thanks Jeff. I doubt there is actual confusion from the other lawyer...I would suspect that this was an attempt to not have it in the mix to divide.

Thanks again....you make me wish I lived in the Ottawa area, just so I could employ you as my lawyer! Your forums are great.

[Jeff]

Thanks Anne!