The COVID19-Family Law Property SCAM That Can Cost Spouses Hundreds of Thousands


FAMILY LAW COVID19 RESOURCE CENTRE


COVID 19 Property SCAM Podcast


Even during this pandemic, there are some separated or separating spouses who are trying to take advantage of the situation, and the operation of Part 1 of Ontario’s Family Law Act, to try to get ALL of their ex’s wealth. It is important for married spouses to understand how that can happen, so they can plan accordingly.

 


 

Up until COVID19 hit, when it came to property matters, separated spouses were more concerned about what happens when assets increase significantly after separation and when those separated spouses share in that increase and when they don’t.  Unfortunately, due to the COVID19, the economy is facing the opposite situation, with people’s RRSPs and other investment savings plummeting in value.  Even with the Courts almost completely closed, many spouses are making legal claims to try to get ALL of what their ex has left. There may be some situations where that is the proper result, but it most it is not.  This type of action is not unique to COVID19.   It is also a concern whenever the economy takes a downturn. It was also a problem in 2008 and 2009.



 

To understand how his scam works, it is necessary to understand how property division works after a marriage.  There is no property division for common law couples under Ontario’s Family Law Act.  To briefly summarize and simplify how property divison works (follow the links for a complete explanation), with some exceptions, married couples share the increase in their net worths from their date of marriage to the day they separate. That makes those two dates very important.  With the possible exception of matrimonial homes, married spouses start counting how much they have, and really how much what they have is increasing in value from the date of marriage.   For the purposes of property division under Ontario’s Family Law Act, they stop considering their increase in net worth on the date they separate.  But, in these trouble times, that same law means that they stop counting any decrease in network on the date of separation too.  

 



The value of what a spouse owns before the date of marriage and after the date of separation don’t matter.  All that matters is what the married spouses had on those two dates. That fact is what makes this scam work.

 

Ontario Family Law Podcast

48 - The COVID19 Family Law Property SCAM

47 - How COVID19 affects Child Support and Spousal Support

46 - Do Parenting Plans and Family Court Orders Continue During COVID-19?

45 - Resolving Family Law Disputes While the Family Courts Are Closed Due to COVID-19

9 - Property Division in Ontario After Marriage

29 - Common Law Separation and Property Division

40 - How to Keep Your Money in Separation and Divorce

Ontario Family Law recognizes that spouses do not have to physically separate, meaning one spouse walking out of the home, for the spouse to be separated.  The law recognizes that spouses can live “separate and apart under the same roof.”  The law says that when the spouses move apart is not necessarily the important date for property division, the date is when they stop living together as husband and wife, even if they continue to reside under the same roof.

 

That gives at least one spouse a big incentive to say the marriage was over, and the parties stopped living as husband and wife BEFORE the COVID19 crisis hit.  It gives an incentive to say the marriage ended before the value of their spouse’s assets plummeted – and to say that they were just sharing the same space as co-tenants, not as spouses anymore.

 

To illustrate the advantage this gives, consider a situation where one spouse had $500,000 in investments, but no other significant assets on January 1, 2020 and the other spouse had very little.  By the end of March, those investments have fallen to $250,000 in value and the stress of being isolated together in the home means that one spouse walks out.  But, that spouse with no assets does not want to share in $250,000.   That spouse wants to share in $500,000.   So, that spouse says they separated – stopped living like spouses -  on January 1 when the investments were worth $500,000.  Under Ontario Ontario’s property equalization scheme, that means that spouse would be owed and equalization payment of half the assets on January 1 - $250,000 – or ALL of what his or her ex has left.

 

That is an extreme case. Most won’t have results that bad.  But, it illustrates the point.

 

Of course, the opposite it also true.   If the spouses had a big fight on New Years, never got along afterward, and stopped living like spouses then, the spouse with the investments has a BIG INCENTIVE to try to reconcile the relationship, even briefly, while the investment value has cratered.  Because, if the spouses rekindle their relationship, even for a couple of days or nights, the date of separation becomes that last date, and they share in the LOW value for the assets.  That could be a big help, particularly if everyone’s investments rebound after the crisis.

 

The law is not so unreasonable as to allow one spouse to pick the date of separation that benefits him or her the most.  If the parties cannot agree, it is a judge or family arbitrator that decides.  With so much money potentially at stake, there is clear incentive for one spouse to lie or stretch the truth. Consequently, judges try to look at the facts objectively and ask themselves: “When would an objective person, who knew the couple, say the relationship was over?”  In determining that, it is not just when the couple stopped having sex, or even when one spouse started having an affair (some relationships recover from that).  The judge (or arbitrator) looks at factors such as

  •  when the spouses stopped eating together,
  • when they stopped going out or vacationing together,
  •  when they stopped showing signs of affection for each other,
  •  when they stopped referring to each other as spouses,
  •  when they took the wedding rings off
  •  when they separated their finances (opened separate accounts or stopped paying each other’s bills)
  • many other possible factors depending on the family’s situation.

 

Determining when spouses separated in these difficult circumstances can be open to argument.  Also, the separation date can be very dependent on the specific facts of the individual case. Since there can be a lot of money at stake, it is important for spouses in the midst of a separation to get in touch with a lawyer who can provide advice based on the specifics of the individual situation.  The lawyer can advise on the best thing to do in the particular situation of each case.  The specific circumstances can make a big difference on what a separating spouse should do to protect himself or herself. It can be important even for someone to speak to a lawyer before he or she walks out to determine when might be the best time to do that, or even if that matters anymore.  top family law lawyer can give you advice about your options and how to get to the result that is best for you.  In these situations, the lawyer’s advice can save a spouse thousands, even hundreds of thousands, of dollars – especially when it helps avoid a scam.

Guide to the Basics of Ontario Family Law - 4th edition cover

 

To get the best advice, specific to your situation, you should speak to family lawyer.  Certified Specialist in Family Law, John Schuman, is known for his concern for children in separation and divorce and has won many child custody cases.  To contact John call 416-446-5807, email him, or fill out the form below. You can use the same form to comment on this page.

Get_it_on_iBooks_Badge_US_1114
new kindle logo
New Kobo Logo

Paperback available from:

amazonlogo


You can get a lot more information about Ontario Family Law issues, including a comprehensive explanation of the Family Law related to parenting after separation, child support, and most other common family law issues by downloading this $9.99 Kindle eBook, Kobo eBook, or iBook for your iPad or iPhone or ordering it from Amazon as a paperback.

   

Many thousands of people get family law assistance from this website everyday.  If you have found this page useful, please share it on your social network using the Facebook, Twitter, LinkedIn and Pinterest buttons at the bottom of the page.  Please comment on this page using the comments section at the bottom to share your thoughts on the best ways to resolve matters for your children after a separation. 

 

Contact Us / Comment:



© John P. Schuman and John P. Schuman, Professional Corporation - 2012-2020