Can keeping assets outside Canada protect them from a 50/50 split in case of a divorce?

Skip to Content News Archives Economy Defence Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Defence Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Defence Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeFP AnswersPersonal FinanceCan keeping assets outside Canada protect them from a 50/50 split in case of a divorce?FP Answers: The change in net worth during a marriage is considered when determining each former spouse’s shareLast updated 27 minutes ago In Canada, a marriage contract may be one of the best protections for you if both spouses are comfortable with this type of agreement. Photo by ridvan_celik/Getty ImagesQ. I’m a Canadian citizen and I would like to get married soon. I have heard that if I divorce at any time then 50 per cent of my wealth will be divided with my spouse. What can I do to protect my assets? For instance, if I kept my assets outside Canada, if a divorce were to happen, can my wife then claim for a 50 per cent division of those assets? —Worried and confused, AliTHIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThis advertisement has not loaded yet, but your article continues below.FP Answers: Divorce does not automatically result in losing half of everything, Ali. The rules surrounding the division of property between spouses vary between provinces. For example, in Ontario, matrimonial homes are generally considered to be divided equally between spouses in the event of divorce. In Alberta, a 50/50 division is not automatic due to differences in the legislation governing family property.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe matrimonial home is often one of the most significant assets that is subject to division, but keep in mind that changes in family net worth involving other assets is also an important factor. Generally, rather than looking at changes in specific assets, the change in net worth (assets minus liabilities) during the marriage is considered when determining each spouse’s share.Canadian citizenship does not impact which rules will apply, Ali, nor does the location of an asset. Having an asset outside of Canada does not protect it. Foreign assets must be disclosed in Canadian family law proceedings. In fact, attempting to hide or transfer assets could create legal and financial issues.This advertisement has not loaded yet, but your article continues below.Foreign assets may also require disclosure to the Canada Revenue Agency (CRA) for tax purposes annually. Canada taxes worldwide income for its residents and requires disclosure of certain foreign property with a cost base over $100,000 annually on tax filings. Holding assets outside of Canada may therefore add complexity and costs to your financial life and tax situation, as these assets can be more challenging to report.In Canada, a marriage contract may be one of the best protections for you if both spouses are comfortable with this type of agreement. Also called a prenuptial agreement, a contract like this can dictate how assets should be divided should the relationship end. They are not ironclad by any means, but they can provide some certainty, Ali. Spouses would need to agree to full financial disclosure prior to marriage while obtaining independent legal advice. These agreements should be prepared carefully and well in advance of the wedding day to ensure fairness and avoid undue pressure on either spouse.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Keeping records is an important process if you want to ensure accuracy and protect each other from unfairness or unexpected outcomes. Documenting each spouse’s net worth prior to marriage is a good place to start. Because gifts and inheritances receive special treatment under provincial law, you should keep these assets separate from family assets where appropriate. For example, inheritances are often used to pay down joint mortgage debt during a marriage. Funding a spouse’s registered accounts is also common when one spouse receives a large gift. Even in these situations, the best thing to do is keep good records and only co-mingle assets where there is a clear benefit and mutual understanding.Collaboration can do a lot to help a family’s joint finances. Attempting to separate or hide assets may not only be offside from a family law or tax perspective, but it may also undermine trust in a marriage. It is not uncommon to see hundreds or even thousands of dollars in lost investment and tax efficiency annually when spouses are not aligned and helping each other work toward joint financial outcomes, Ali.Andrew Dobson is a fee-only, advice-only certified financial planner (CFP) and chartered investment manager (CIM) at Objective Financial Partners Inc. in London, Ont. He does not sell any financial products whatsoever. He can be reached at adobson@objectivecfp.com.Do you have a question for FP Answers? 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