During a separation, there are often legitimate concerns about the protection of the marital finances and property before it is divided between the two spouses.
As you’re working out the main property division and support issues in your separation agreement, certain steps can be taken to protect yourself financially.
As a starting point, make a note of the day you and your spouse separated. This will act as a clear “cut-off point” where the marital estate affairs ended (each of you is entitled to half of the marital property value and is responsible for half the family debt at that date) and separate financial arrangements commenced.
After this date, any property you buy with your own money will be yours, as well as anything you brought into the marriage.
From there, you can protect yourself financially with the following actions.
Create a list of assets and debts
Get yourself organized by creating a comprehensive list of assets and debts. This should include any jointly held property and finances, as well as anything regarded as separate property, which should be identified.
Here’s a basic checklist of what to include:
- Bank accounts
- RRSPs, TFSAs, and pensions
- Vehicles
- Real property (land, houses, apartments)
- Businesses
- Jewelry or art collections
- Insurance policies
- Any other marital assets (or debts) not listed above
- Any personal property, inheritances, gifts, etc., that may be regarded as separate property
You may like to swap lists with your spouse if you have maintained good communication.
Gather documentation and store it safely
It’s not enough to simply list the assets you own. You may need to prove who owns what if there are disputes. This means gathering together the relevant documentation relating to both marital and personal property and storing it in a safe place until it is required.
You should actively seek out the following as you compile your bundle of documents:
- Tax returns (personal and corporate) for you and your spouse for the past three years
- Bank and investment statements
- Credit card statements
- Life insurance policies
- Pension statements
- Wills and Trusts
- Personal documents like driving licenses and the family’s birth certificates/SIN cards/passports/citizenship documents, etc.
Keep the originals in a safe place and copy each document or take photos, if that’s easier. Share copies with your spouse and, if your spouse has any documents that you don’t have access to, request copies for your records.
If you don’t have a safe place at home to store the most important documents, ask someone you trust (like your divorce lawyer) to safely store them or rent a safe deposit box at a bank or other financial institution.
Protect your bank accounts and credit cards
If you and your spouse have joint bank accounts and credit cards, it’s also sensible to take steps to protect these accounts after separation.
The best idea is usually to divide the funds/debts and close the accounts. If this is not possible or you decide to retain the account, start by informing your bank that you and your spouse have separated.
Also, request that:
- A limit is placed on how much cash can be taken out of any joint accounts by one person, and
- All larger withdrawals require the signatures of both account holders.
If all marital accounts are in your spouse’s name, you may need a financial restraining order to prevent your spouse from drawing down accounts or running up credit card debt. You can find out how to do that below.
If you’re the primary account holder of a credit card account that your spouse has card access to, you can call the provider and ask for the spouse to be removed from the account or request a lower credit limit.
If you and your spouse are co-holders of an account, both of you will need to contact the provider to cancel the account.
Protect land / properties from being sold or borrowed against
Under the Family Law Act, protection orders may be sought against:
- Current or former spouses
- Partners in a marriage-like relationship, regardless of duration
- The other parent or legal guardian of your children
- Relatives of a spouse or children’s other parent who live with them
- Your own relatives who live with you
- Your children
File a financial restraining order
As suggested already, to prevent a spouse from affecting marital assets, the other spouse can apply for a financial restraining order from the Supreme Court. Sometimes, it’s simply better to be safe than sorry.
A typical restraining order restrains the spouse from selling or seeking to borrow against the family property and other property at issue without the written agreement of the claimant or the court. The order usually covers real and personal property in British Columbia and may be sought through several different channels:
The Family Law Act
Most financial restraining orders in British Columbia are issued under Section 91(1) of the Family Law Act, which states:
On application by a spouse, the Supreme Court must make an order restraining the other spouse from disposing of any property at issue under this Part or Part 6 until or unless the other spouse establishes that a claim made under this Part or Part 6 will not be defeated or adversely affected by the disposal of the property.
No notice of the application needs to be issued to the other spouse, and the order must be granted on application, unless the other party can provide evidence of enough assets that the applicant’s claim will not be frustrated by the sale of some assets.
Supreme Court Family Rules
The Supreme Court Family Rules, Section 12-4, also empowers the court to make a general restraining order or “injunction”. This includes an identical type of restraining order to that issued under the Family Law Act, as well as more specific actions, such as incurring credit card debt.
To apply for an injunction, the applicant must show a reasonable claim against assets owned by the spouse. The application must also show that the spouse has disposed of or encumbered their assets or is likely to do so, and that the inconvenience suffered by the spouse as a result of the injunction will be less severe than that suffered by the applicant if the injunction isn’t granted.
The Law and Equity Act
Section 39 of the Law and Equity Act in BC also grants courts the power to issue an injunction “in all cases in which it appears to the court to be just or convenient”. The powers are quite broad if the claim is reasonable, as with orders issued under the Supreme Court Family Rules.
Most spouses seek legal advice and representation when requesting a financial restraining order from the court in British Columbia.
For a free 30-minute consultation about your legal options during a divorce or separation, contact the team at Legalbird today.
