Financial disclosure is an essential element in most family mediations. Mediation is about compromise. In order to compromise, each party must fully understand the family’s financial situation.
The law in British Columbia generally divides all assets and all debts equally. However, there are exceptions. For example, a property which was in a party’s name prior to the relationship is considered excluded property. The same principle applies to debt.
The basic requirements are that each party exchange their last 3 years T1 tax returns, Canada Revenue Agency (CRA), Notices of Assessment, and a list of debts and assets that are registered in their names. The parties should also produce a list of assets and debt that are registered jointly.
Houses are often an area of conflict. If a party already owned a house at the time of cohabitation, then it would be unfair to divide the asset equally. The normal approach for a house is the subtract the value at the time of cohabitation from the value at the time of separation. The proceeds would then be equally divisible.
If you own a house and are planning on living with someone, it is important to get a valuation of the house at the time of cohabitation. This will solve a lot of problems with financial disclosure in the event of separation.
Pensions and RSPs
RSPs and Pensions are considered family assets. Pensions are generally divided based upon the period of cohabitation. For example, if the parties started living together in June 2007, married in August 2011, and separated in May 2015, pension benefits accrued between June 2007 and May 2015 would be divisible. RSPs are treated the same way as a house. RSPs are normally equalized using a spousal rollover. This means that funds can be transferred from one spouse’s RSP to the other’s RSP without paying any tax.
The type of financial disclosure required for a family mediation varies from case to case. Some people require very little information, because they have a good understanding of their spouse’s financial situation. Other cases may need substantial financial disclosure.
Financial disclosure is something you should discuss with your mediator at the initial meeting. They may want you to prepare a formal financial statement or have a list of documents they will require. It is always best to provide full and frank financial disclosure.
For more information on Financial Information You Need, click here.
Jayne Embree MA
Jayne Embree holds a Masters in Psychology and is a highly experienced Divorce Coach and Child Specialist. She is currently working as the Mediation Co-ordinator for Victoria Mediation Services.