Spouse Transferred Assets to Relatives Before Separation Ontario

Sometimes a spouse who senses the marriage is ending quietly moves money to a parent, a sibling or a new partner. The label on the account changes, but the spouse may still treat the funds as theirs. If you suspect this, you are probably wondering whether the money can still be counted.

This article explains why transfers matter in an equalization calculation, what you need to show, and which tools may be available. The details turn on facts and on parts of the statute that a lawyer should check, so treat this as a guide to the questions to ask.

Why a transfer can change the numbers

A spouse's net family property is the value of all property that spouse owns on the valuation date, except excluded property, less debts and liabilities. If property has been moved to someone else before that date, the spouse no longer owns it on paper, and the figure can look lower than the real picture.

That matters because the spouse with the lesser net family property is entitled to one-half of the difference between the two. A transfer to a relative can shrink the difference, or even flip which spouse looks like the one who owes.

Not every transfer is a problem. How a particular transfer should be treated depends on the facts, so it is worth confirming with a lawyer.

What you must be able to show

A suspicion alone will not persuade a court. You will generally need evidence of what was transferred, its value, when it moved, who received it and what was given in return. Transfers close to separation, for no payment, or to a person who then treats the property as the spouse's, often draw attention.

Ownership can also turn on evidence about intention. For example, where money is placed in a joint account, the law starts with a presumption of joint ownership, but a spouse can rebut that presumption with evidence. The same kind of fact-finding applies when relatives claim a transfer was a true gift or loan.

• Bank and investment statements showing large withdrawals or transfers
• Land title records, deeds and mortgage documents for any real estate
• Loan agreements, promissory notes or repayment records between your spouse and the relative
• Messages or emails describing why the transfer happened
• Business records, if the property was a company or shares
• Tax returns that list assets, income or interest

How a court can respond

How a court may respond to a transfer depends on your facts, so it is worth confirming with a lawyer which orders could apply to your situation.

Another route to something other than an equal division is s. 5(6). A court can vary the equal share only if equalizing would be unconscionable. The threshold is high, and mere unfairness is not enough.

Special issues: the home, double counting and contracts

If the transferred property was or is a family residence, special rules apply. A matrimonial home is property in which a person has an interest and which the person and spouse ordinarily occupied as their family residence at separation. Whether a transfer affected this status, and how, should be reviewed by a lawyer promptly.

Be wary of counting the same property twice. The same property cannot be both an excluded amount under s. 4(2) and a marriage-date deduction, because that double-counts it in that spouse's favour. Your spouse's side may try this argument, and you should watch for it.

A relative may also have gifted money to your spouse. Property acquired by gift or inheritance from a third person after the date of marriage is excluded from net family property, but the exclusion does not apply to a matrimonial home. Funds that can be traced into other property can also stay excluded. If your spouse says the money came from a parent, expect a tracing dispute.

If the transfer was made under a domestic contract, note that property the spouses agreed is not to be included is excluded from net family property. Setting a contract aside is a two-step process: first showing a statutory circumstance applies, then persuading the court to exercise its discretion, where fairness is a consideration.

What to do next

Move quickly but calmly. Do not confront the relative before you have collected your evidence, and avoid retaliating by moving assets yourself, which can hurt your own position. Speak to a family lawyer early, because deadlines and urgent steps may apply depending on what type of property is involved, and a lawyer can confirm which ones fit your situation.

• Make a list of every asset you believe was moved, with dates and approximate values
• Secure copies of statements, titles and messages you can lawfully access
• Check land title records for any changes to the home or other real estate
• Ask a lawyer about financial disclosure and whether urgent steps are needed to preserve property
• Do not sign anything that releases property or claims until you have advice

Frequently asked questions