Q&A By John T. Syrtash, Associate,
Garfin Zeidenberg LLP, a Toronto family law lawyer for the past 38 years
Question: I have been married for seven years. My wife and I live in the home I own, bought five years before marriage. However, the house is registered in my name only. My wife contributed nothing to purchase or enhancement to the value of this home. I also have a large amount of money in RRSPs and no debts. My wife has no assets or liabilities. Our marriage may end in separation, and I am not sure. The mortgage payments are a bit high, and I would prefer to move into a smaller home. What is my current situation if we were to separate and if not, what should I do to plan for separation down the road to minimize damage to my property holding? Before marriage, my home was worth $350,000. Now it is worth more than $550,000.
Answer: Currently, if you were to separate, your wife would be entitled to half of the entire value of your matrimonial home, including its pre-marital value. She would also be entitled to half of the increase in the value of your RRSP’s after-tax since they increased after the date of marriage, valued as of the date of separation. There is nothing you can do about your RRSPs unless you foolishly and improperly attempt to transfer them into names of third parties, like a close and trusted relative or friend. However, the moment you do so, the entire capital amount of the RRSPs becomes calculated as part of your taxable income for the year in which you cashed them. Moreover, if you transferred them close to the date of separation, say within the year or so, you could be accused of deliberately and fraudulently depleting your assets to deprive your wife of her rights to an equalization spirit. She might then like to recover what you try to hide from one of your other more exposed assets or your income over several years, plus penalties and interest. Your matrimonial home is another matter. The law gives her an unfair spit of its premarital value in your situation. She might want to buy a new home especially if you offer to do so in joint names. Since you will not have owned that second home on the date of marriage, you can deduct the full value of the equity in the first home you owned to the date of marriage in the equalization calculation you separate. This effectively means that your wife would only benefit from her half share in the post-marital value of the second or any subsequent matrimonial home. According to your valuations, this means a saving of about $100,000 if you were to separate in the near future.
John Syrtash is an associate and family law lawyer with the Toronto firm of GARFIN ZEIDENBERG LLP.
Neither GARFIN ZEIDENBERG LLP nor John Syrtash is liable for any consequences arising from anyone’s reliance on this material, presented as general information and not as a legal opinion.
John T. Syrtash,
GARFIN ZEIDENBERG LLP
5255 Yonge Street, Suite 800
Toronto, Ontario, Canada M2N 6P4
Cell: (416) 886-0359
Fax: (416) 512-9992
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