Canadian Business Law Discussion Questions

Lesson 9 – Business OrganizationStructures
Objectives
• By the end of this lesson, you will be able to:
• Identify and describe sole proprietorships
• Explain the advantages and disadvantages of a sole
proprietorship
• Distinguish between a general partnership, a limited partnership
and a limited liability partnership
• Explain the advantages and disadvantages of a partnership
Sole Proprietorships
Sole Proprietorship (sp) – simplest form of business
organization
• The sole proprietorship is the simplest form of business organization.
• An sp begins when a person starts to carry on business on their own.
• Eg. – if you agree to cut your neighbour’s grass for money each week,
you are carrying on business as an sp.
Sole Proprietorship (sp) – simplest form of business
organization
• As an sp, you could hire an employee to cut your neighbour’s grass,
but you remain the sole owner of the business and the only person
responsible for it.
• As an sp, you cannot be an employee of the business because you
cannot contract with yourself.
Sole Proprietorship (sp) – simplest form of business
organization
• In an sp, the sole proprietor experiences all of the benefits and
burdens of the business.
• The sole proprietor is exclusively responsible for:
1. Performing all contracts entered into (e.g. sales, contractors and
employees)
2. All torts committed personally in connection with the business.
Sole Proprietorship (sp) – simplest form of business
organization
3. A sp is vicariously liable for all torts committed by employees in the
course of the their employment.
4. For income tax purposes, the income or loss from the sole
proprietorship is included with the income or loss from other sources in
calculating the sole proprietor’s personal tax liability.
SP’s and Raising Capital
• Another problem with sole proprietorships is raising money.
• Since it is impossible to divide up ownership of a sole
proprietorship, the only method of financing is for the sole
proprietor to borrow money.
• An advantage of other forms of business is that they permit a
wider range of financing possibilities..
Legal Requirements of an SP
• The name of a sole proprietorship must be registered if the name is
something other than, or more than, the proprietor’s personal
name.
• Registration must be done in every province or territory in which
the sole proprietorship carries on business. (see Business Names
Act RSO, 1990 s2(2))
• For example, Hamad Malik does not have to register if he carries
on the grass cutting business under his own name. However, he
must register if he uses the name Malik’s Superior Gardening
Services or Stand Alone Gardening.
Legal Requirements of an SP
• A business license is required for some types of activities (this is true
of all forms of organizations).
• A business license is government permission to operate a certain kind
of business. The sole proprietor should check licensing requirements
with the municipal government (license and permit issuing office).
Legal Requirements of an SP
• Licensing requirements apply for many types of businesses, such as:
• Billiard Hall, Commercial parking lot
• Entertainment establishment and nightclub, Holistic centre
• Place of amusement (go karts, mini golf)
• Public garage (gas station, vehicle repair or rental), Restaurant
Advantages and Disadvantages
• An sp is simple and easy to set up.
• It is also easy to dissolve, as the sole proprietor simply stops
carrying on business, but, the sole proprietor remains bound by all
obligations, until they are completed, despite having dissolved
the business.
Advantages and Disadvantages
• The main disadvantage of a sole proprietorship is unlimited
personal liability.
Examples:
 Bank loan – Owner must repay the loan
 Breach of contract – Owner is personally liable for breach
 Tort committed by employee – Owner is personally liable
Advantages and Disadvantages
• Third parties who are owed money by the sole proprietor, may take all of
the sp’s personal assets and business assets to satisfy the business’s
obligations.
• Risk increases as liabilities increase.
• Suppose that your grass cutting business has become very successful and
you have entered into contracts to cut 1000 lawns each week and you
have hired 100 students to perform the work.
• As a sole proprietor, you are personally responsible for all of the work and
to each employee. If one of your customers is unhappy with the work or
one of your employees sues you for wrongful dismissal, the liability is
yours alone.
Partnerships
Partnerships
• A partnership is a form of business organization that comes into
existence when two or more people carry on business together
with a view to a profit.
• A partnership occurs automatically by operation of law.
• For example, you and I agree to develop a business together. I
agree to buy a lawnmower and you agree to cut lawns with it.
The profits are split between us. We have a partnership.
Characteristics of a Partnership
1. Although the business can do some things in the name of the
partnership, such as hold title to land or be sued, a partnership is
not legally separate from the partners.
2.A partner cannot be employed by the partnership
Characteristics of a Partnership
3. All benefits of the partnership business accrue directly to the partners
4. All partners, even those who did not consent to a particular obligation,
are liable for all obligations of the business, including torts by a partner
or an employee of the partnership
Partnerships and Obligations
• If a partnership is liable for an obligation, each partner is liable to
the full extent of the obligation.
• All of the partner’s personal assets – not just those that the
partner committed to the business, may be seized to satisfy a
partnership debt.
Partnerships and Creditworthiness
• A partnership’s creditworthiness is partially based on the
creditworthiness of the individual partners.
• For example, Ellie and Nina are partners in a restaurant business.
The partnership asks a restaurant supplier to provide them with
200k worth of restaurant equipment on 90 days credit. The
decision about whether or not to extend credit will be based on:
1. The assets that are held by the business, and
2. By Ellie and Nina, personally
Partnerships and Creditworthiness Con’t
• If payment is not made within 90 days, and the business has
assets of 100 k, the restaurant supplier could get a judgment
against the partnership for 100k, and seize those assets.
• The supplier could also try to recover the remaining 100k from
Ellie and Nina, personally, either:
• 50k from each or 100k from one of them.
• It would be up to the partners to work out how they would pay
each other back
Income Tax
• The income or loss of the partnership is calculated by adding up
all revenues of the partnership and deducting all of the expenses.
• A share of the income or loss is allocated to each partner
according to each partner’s entitlement to a share in the profits.
• A partner’s share of any business income must be included in
their personal income, even if those profits were re-invested in the
business and were not actually paid to the partner.
Partnership Property
• Partnership property is all of the property acquired on behalf of
the partnership.
• If property is bought with partnership money, it has been bought
on behalf of the partnership.
• When property becomes partnership property, it must be held and
used exclusively for the partnership and in accordance with the
partnership agreement.
Partnership Property
• Suppose you bought a car for use in the partnership business.
• It would become partnership property.
• Even if you paid for the car with personal funds and you were the
registered owner of the vehicle, you could not convert it back to
your personal use without the consent of the other partners
Partnership Legislation and Partnership Agreements
• The English courts developed partnership law, and created the
the Partnership Act of 1890.
• Ontario’s partnership legislation is the Partnerships Act 1990 and
it is based on the English statute.
Partnership Legislation and Partnership Agreements
• The Act has never been substantially revised. And as a result, it
often does not provide a satisfactory set of rules for organizing a
partnership.
• For that reason, partners often create a partnership agreement to
supplement or modify the rules that govern their relationship.
• Note – that the Act provides a default – when there is no
agreement, we refer to the Act to resolve issues.
Partnership or Something Else?
• A partnership comes into existence when two or more persons
carry on business together with a view to profit.
• Sometimes, it is difficult to discern whether or not a partnership
actually exists.
Factors a Court will Consider in Determining if a
Partnership Exists:
• Sharing profits
• Sharing responsibility for losses, including guaranteeing
partnership debts
• Jointly owning property
• Jointly controlling the business
• Participating in management
• Stating an intention to form a partnership in a contract
• Filing certain government contracts, such as registration under
business names legislation as a partnership
Factors a Court will Csonsider in Determining if a
Partnership Exists:
• Holding oneself as a partner
• Being involved in the business full-time
• Using a firm name, perhaps in advertising
• Hiring personnel
• Establishing a separate address for the business
• Capital (the amount of money contributed by the partners is called
capital – it can be in the form of money, property or services)
How Liabilities of the Partnership Arise
• The Partnerships Act determines when a partnership incurs
liability. (s. 6-19 of the Partnerships Act).
• Each partner is considered an agent of the partnership.
• This means that each partner binds the partnership, when acting
in the usual course of business on behalf of the partnership.
• This is known as the principle of mutual agency.
What is Mutual Agency?
• Mutual agency means that each partner, when acting in the usual
course of partnership business, binds the partnership.
• An exception occurs only when a partner did not have authority to act
in a particular way and the outside party knew that that partner lacked
authority.
• The principle of mutual agency effectively places the risk of
unauthorized behaviour on all of the partners. Partners are also liable
for torts, such as negligence, that their fellow partners commit in the
ordinary course of the partnership business. Given the unlimited
personal liability of each partner, those risks are significant.
Several and Joint Liability and Torts
• Partners are also liable for torts, such as negligence, that their
fellow partners commit in the ordinary course of the partnership
business.
Example:
● If Adam gives poor advice to a client about his computer systems
needs and Adam is sued for the tort of negligence, all of the
partners, not just Adam, are liable for any damages that result.
Holding Out
• Individuals are not generally liable for partnership liabilities that occurred
before they became a partner or after they left the business.
• But if an individual holds herself out as a partner or allows someone else
to do so, she will be liable for partnership obligations.
• Holding out occurs when a person represents herself as a partner or
allows someone else to do so.
• E.g. Eric allows his name to be attached to a partnership even though he
is not a partner. A bank lends money to the partnership because it knows
that Eric is credit worthy. The bank can ask for repayment from Eric if it
relied on Eric’s apparent membership in the partnership, when making the
decision about the loan.
Managing Liability Risk for Partners
• Each partner owes a fiduciary duty to the other.
• This has been determined by case law.
• There is no mention of this duty in the Partnerships Act.
• The duty requires each partner to act honestly and in good faith
with a view to the best interests of the partnership.
Managing Liability Risk for Partners
• Partners must never put their personal interests ahead of those of
the partnership. For instance, a partner cannot sell a piece of
property to the partnership for an unfairly high price.
• A partner cannot compete with the partnership.
• A partner allowed to use the name, property or business
reputation of the partnership for personal benefit.
• A partner who breaches the fiduciary duty must pay any resulting
profits to the partnership.
Managing Liability Risk for Partners
• A Partnership Agreement can be used to manage the risk of
liability. Each partner can be given specific and/or limited
authority and can be subject to control and monitoring
mechanisms.
• For instance, restrictions can be placed on who can write cheques
or sign contracts.
• But, these restrictions do not prevent liability to the third parties.
Managing Liability Risk for Partners
• When a partner fails to follow the rules and creates a liability, the
partnership will usually still be liable.
• When a liability is created in breach of the Partnership
Agreement, the Partnership Agreement may require the offending
partner to compensate the others for the amounts that they are
forced to pay to the third party.
• That is called a right to indemnification (to indemnify another party
is to compensate that party for a loss)
Managing Liability Risk for Partners
• Partners can take practical steps to reduce the risk of partnership
liability.
• E.g. Limit the partnership to a small number of people who know
each other very well.
• When the business is small, typically each partner is involved in
the entire business on a daily basis and informal monitoring is
relatively easy.
Managing Liability Risk for Partners
• In this type of situation, there is less likelihood for unauthorized
activity.
• But as the business grows and becomes less personal, these
protections break down.
• For example, in the case of a large law firm or accounting firm,
the partners may seldom be involved in all aspects of the
business. This is the time when formal monitoring mechanisms
should be established.
Limited Partnership
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Education Ltd.
• A partner may limit his liability for partnership debts and protect his
personal estate from claims by the creditors of the partnership.
• At least one partner (the general partner) has unlimited liability, while
at least one other (the limited partner), has liability limited to the
amount of their investment.
Limited Partnership
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Education Ltd.
• The limited partner may share in the profits and may see the books,
but she does not have any control in the business.
• The limited partner may not withdraw her investment in the business
until the partnership is dissolved. (Good for someone who does not
want an active role in the business).
• Suppose that you had invested $5000.00 in a limited partnership as
a limited partner. The partnership is being sued by an unpaid
creditor. All of the partnership assets and the personal assets of the
general partner can be used to satisfy that debt. Your liability is
limited to the amount you invested ($5000.00).
Limited Liability Partnership
• In an LLP, all partners have limited liability status. This type of
partnership is well suited to professional practices where one
partner cannot know or control the potential professional liability of
other partners (e.g. lawyers or accountants).
• With this type of partnership, there is unlimited liability for the
general debts of the partnership and for the partner’s own personal
negligence and that of employee’s who are under his control.
•
• But individual partners are not responsible for claims arising out of
negligent acts or omissions of the other partners.
Business and Family Law – Week Ten –
Business Organization Structures (Continued)
and Shareholder Agreements
Objectives:
• By the end of this lesson, you will be able to:
1. Explain how corporations come into existence
2. Explain how a corporation is different from any other type of
business structure
3. Describe the roles and rights of directors and shareholders
How do corporations come into existence?
• Unlike sole proprietorships and partnerships, corporations do not
come into existence simply because one or more people start
doing business.
• A corporation is created only when certain documents are filed
with the appropriate government office under either the federal
Canada Business Corporations Act (CBCA) or one of its provincial
or territorial counterparts.
Relevant Legislation
• For the most part, corporations carrying on business in Ontario
are governed by one of two statutes:
• 1. The Ontario Business Corporations Act (OBCA)
• 2. The Canada Business Corporations Act (CBCA)
• The two statutes are similar in many ways. However, if you wish
to do business in other provinces or another country, you should
incorporate under the CBCA
The Incorporation Process
• Under the CBCA and the Ontario Business Corporations Act (OBCA),
incorporation requires the filing of,
1. Articles of incorporation,
The articles of incorporation is the document that defines the
corporation’s basic characteristics, such as
• its name, the class and number of shares authorized to be issued, the
number of directors and any restrictions on transferring shares.
2. A name search report on the proposed name of the corporation, and
3. The fee
The Nature of a Corporation
• In many ways a corporation has the same rights, powers and
privileges as a natural person.
• The corporation carries on business, owns property, possesses rights,
and incurs liabilities (including liability for crimes and torts).
• A corporation is separate and distinct from it shareholders, and it acts
not through them but through its authorized agents.
• A shareholder is a person who holds a share interest in a
corporation; a part-owner of the corporation.
A corporation is a separate legal entity
• Separate legal existence has three important implications:
1. A shareholder can be an employee or a creditor of the
corporation. This is because the shareholder and the corporation
are two distinct entities, from a legal perspective.
2. For the same reason, the corporation is unaffected if a
shareholder dies or withdraws from the business.
A corporation is a separate legal entity
A corporation is treated separately for income tax purposes. Income
or losses that are generated through the business are attributed to
the corporation and taxed at the corporate level.
• Shareholders are taxed only when they personally receive
something from the corporation such as a dividend.
• A dividend is a payment of cash or property by the corporation to
shareholders, which is authorized by the directors.
• The payment of dividends is one way that shareholders receive a
return on their investment in the corporation.
Courts sometimes ignore a corporation’s separate
existence
• Generally, there must be some wrongdoing such as fraud.
• E.g. Big Bend Hotel+ Ltd. v. Security Mutual Casualty Co.
(1979) BC, Mr. Kumar established a corporation so he could obtain
insurance, as he was ineligible, personally. The insurance company
had cancelled an earlier fire insurance policy due to suspicious
circumstances of a fire that occurred in a previous hotel operated
by Kumar. When the Big Bend Hotel corporation experienced a
fire, the insurance company did not pay out, as Kumar had failed to
disclose the previous fire. The court held that the insurer did not
have to pay the claim, as the incorporation had occurred under
fraudulent circumstances.
Shareholders and limited liability
Shareholders have limited liability for the debts of the corporation, and
the creditors may look only to the assets of the corporation to satisfy
their claims.
• Shareholders have many rights, but they do not own own the
business that is carried on by the corporation, nor the property
belonging to it.
• This is in direct contrast to sole proprietors and partners, who carry
on the business, own the property of the business, possess its rights,
and are directly responsible for its liabilities.
Shareholders and limited liability con’t
• Shareholders have limited liability for the obligations of the
corporation. This means that shareholders cannot lose more than
they invest in the corporation in return for their shares.
• Creditors, employees and other claimants against the corporation
can demand to be paid out of the corporation’s assets.
• Once the corporation’s assets are exhausted, the creditors cannot
claim against the shareholders personally.
• In the worst case, if all the assets of the corporation are taken by
creditors, then the shareholder’s shares may be worth nothing.
They will have lost all of their investment, but nothing more.
Management and Control of the Corporation
• Power and responsibility in the corporation belong to different
groups of people
• Shareholders are entitled to the assets of the corporation
remaining after all the creditors are paid on its dissolution.
• Their only powers are to vote for the election of directors, to
appoint the auditor, and to vote on proposals made to them.
• As shareholders, they do not participate in managing the ordinary
business of the corporation.
Management and Control of the Corporation
• Directors are responsible for managing or supervising the
management of the business of the corporation and its internal
affairs.
• Officers are appointed by directors and exercise substantial
management powers delegated to them by the directors. They
generally hold offices such as president, secretary, treasurer etc.
Division of Corporate Power
• Directors – Under corporation law, a person elected by the
shareholders of a corporation to manage its affairs. The director’s
relationship with the corporation is fiduciary.
• Every corporation must have at least one director. The directors of
a corporation are the managers of the business. Unlike a
partnership, where all partners may bind the partnership, in a
corporation, this right is limited to the directors and in most cases to
certain directors who may also be officers of the corporation.
Basically, directors are responsible for the operation of the
corporation.
Division of Corporate Power
• Note – Legislation attempts to separate ownership from
management, as much as possible.
• Most management rights belong to directors.
• E.g. day-to-day operations.
• Ultimately, however, shareholders have quite a bit of power, as they
can elect new directors, if they so choose, at the next annual
meeting.
Shareholder’s Rights
• Shareholders as owners of the corporation are entitled to full
disclosure about the business’s activities, from the directors, at
regular intervals.
• They are entitled to vote on whom should be a director, at general
meetings.
• They are also supposed to approve director’s important
actions/decisions since the previous general meeting.
Shareholder Agreements
• The issue here is dealing with a “majority rules” environment.
• Creating a shareholder’s agreement is important because it can
protect minority shareholders, such as:
1.Agreement between the shareholder and the corporation – e.g.
the business was running as a partnership and becomes a new
corporation. The agreement guarantees long-term employment to
a shareholder in exchange for accepting a status as a minority
shareholder.
2.Agreement between shareholder and other shareholders – e.g.
terms for buying out each other’s interests
What’s Next
• Complete review questions
• Lecture: Marriage and Co-Habitation, Separation and Divorce,
Domestic Contracts
• Next week: Quiz #2
Quiz #2
This short quiz will test you on the last 3 weeks of material, being the topics on: Business Organization
Structures (Part I and II), Marriage and Co-Habitation, Separation and Divorce, and Domestic Contracts:
•
•
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•
Grade: The quiz will be worth 10% of your final grade
Format: The quiz will be multiple choice
Length: The quiz will include 20 questions
Content: You will not be tested on the textbook material for this quiz. The quiz will be based on lecture
material, including slides, the lecture itself, and class discussion. The materials are posted on
BlackBoard under “Weekly Learning Materials”.
• Delivery: The quiz will be available under the “Assessments” section on BlackBoard as of 9 AM EST on
Thursday, July 21st. The quiz will remain open for 24 hours, meaning that you must submit your quiz
answers by 9 AM EST on Friday, July 22nd. You will have 45 minutes to write the quiz from the time
you open it. It will autosubmit after that time.
• Academic Integrity: This quiz is designed to be written independently. There are safeguards in place to
prevent a benefit to students who collaborate with others. Please consult the syllabus for academic
integrity principles and violations. Be advised that the final exam will be written in a lockdown browser
and monitored, and that any violations will result in a grade of zero.
Business and Family Law – Marriage and CoHabitation, Separation and Divorce, and
Domestic Contracts
Part I: Marriage and Co-Habitation
Objectives
• By the end of this part of the lesson you will be able to:
• 1. Distinguish between a marriage and a common law relationship
• 2. Identify jurisdiction with respect to marriage, and
• 3. Discuss the requirements of a valid marriage (both civil and
religious)
• 4. Explain the difference between a void and voidable marriage
What is marriage?
• Marriage is a contract between two people. Because marriage is
a contractual relationship, it is subject to the rules that govern
contracts. In particular, a marriage contract is valid, only when
1. The individuals have the legal capacity (legal ability to enter into
the contract of marriage), and
2. The individuals have complied with certain legal formalities (e.g.
they have obtained a marriage licence).
What is marriage?
• Marriage is more than a contract.
• It is also a status that the government recognizes and the
government has created laws that apply to people who are
married.
• For example, people who are married, may share the property
acquired during the marriage, if the marriage ends.
Definition of Marriage
Historical Definition
•The voluntary union for life of one man and one woman to the
exclusion of all others
Current Definition
•The lawful union of two persons to the exclusion of all others.
Who has legal jurisdiction over marriage?
• The federal government has jurisdiction over marriage.
• This includes matters that relate to the capacity to marry, which is
governed by the law of the domicile province (permanent
residence) of the parties, just before they marry.
Who has legal jurisdiction over marriage?
• Provinces have jurisdiction over the solemnization of marriage,
specifically, the provinces preside over licensing and the nature of
the marital ceremony.
What is Legal Capacity to Marry?
•Persons who plan on getting married must meet requirements
with respect to:
▫ Age
▫ Consanguinity (blood relationship), and
▫ Marital status
Legal Capacity to Marry – Age
• According to the Ontario Marriage Act, a person must be at least
18 years old to be married without the consent of his or her
parents.
Legal Capacity to Marry – Consanguinity
• We cannot marry someone who we are closely related to either
by blood or marriage. Specifically, one cannot marry their parent,
grandparent, child, grandchild, sibling or half-sibling either by
blood or adoption. (The Marriage (Prohibited Degrees) Act).
• A marriage between two individuals who are related in this way is
considered void.
• People can marry other relatives who are not mentioned in the
Act. For example, one can marry a cousin.
Legal Capacity to Marry – Marital Status
A person cannot already be married at the time
he/she enters into a marriage
A previous marriage must have ended either by
death, divorce or annulment
Formalities of Marriage
The formalities of marriage include:
• Licence requirements,
• Determining who is permitted to conduct a marriage ceremony,
• What must take place during the actual ceremony, and
• Residency requirements (in some jurisdictions)
Formalities of Marriage
• The province in which the marriage takes place determines the
formalities of the marriage.
• In Ontario, the formalities of marriages are set out in the Marriage
Act.
Requirements for a Civil Marriage
▫ A civil marriage requires a marriage licence
▫ A couple gets a marriage licence from City Hall
▫ They must be able to prove their identity and that neither of them are
currently married
Requirements for a Religious Marriage
▫ A religious marriage can be performed under the authority of a marriage
licence or a publication of banns (depending on the religious
denomination)
▫ Publication of banns involves publicly stating that the parties intend to
marry during church services. This public announcement is intended to
give anyone a chance to object to the marriage on either legal or
religious grounds.
Who Can Perform a Marriage Ceremony?
• A civil marriage can be performed by a judge, justice of the peace or a
clerk of a local municipality
• A religious marriage can be performed by a person who is recognized
by a religious body to perform marriages and who is registered to
perform marriages.
• The person who performs the marriage must send the registration
documentation to the Office of the Registrar General.
Form of the Ceremony – Religious
Marriage
•A religious marriage, performed by a religious official is valid if it is
performed according to the customs and rules of the particular
religion.
Form of the Ceremony – Civil Marriage
• There is no mandated format for the ceremony, but three things
must occur during the ceremony in the presence of witnesses and
the person performing the ceremony.
1.Each individual must declare that they know of no “lawful
impediment” why they should not be joined in matrimony,”
2.Each individual must ask the people present to witness that he or
she takes the other to be their lawful wedded spouse or partner, and
3.The person performing the ceremony must pronounce that the
couple are married, according to the powers vested in him/her by the
Marriage Act.
Criteria for a Common Law Relationship
• In Ontario, two people are considered to be a common law couple
if
1. they have been continuously living together in a conjugal
relationship for at least three years, or
2. they have a child together by birth or adoption, and they have
lived together for at least one year.
How do the courts decide if couples are or were
cohabiting?
• If there is a dispute about whether or not the couple actually met
the requirement of being in a common-law relationship, the courts
have determined criteria for “cohabitation.” The criteria include:
• Shared shelter, Sexual and Personal Behaviour, Services, social
activities, Economic Support and Children, as well as the societal
perception that the two people were a couple.
Are unmarried cohabiters legally entitled to the same
things as married couples?
•Unmarried couples who cohabit have many of the same rights as
married couples, regarding:
▪ Taxes
▪ Pensions
▪ Insurance, and
▪ Spousal and child support
But unmarried couples in Ontario do not have the same property
rights as married couples
Void and Voidable Marriages
•A marriage contract can be void ab initio or voidable
•Void ab initio
▫ It is as if the marriage never took place
•Voidable
▫ The marriage is valid, but either of the parties can
choose to regard the marriage as void. The
marriage remains valid until it is annulled.
Part II: Separation and Divorce
Objectives:
• By the end of this part of the lesson you will be able to:
• 1. Explain how to legally establish a marital breakdown
• 2. Describe the bars to divorce, and
• 3. Distinguish between an uncontested and a contested divorce
Grounds for Divorce
• Grounds for divorce are dealt with in the Divorce Act
• Breakdown of the marriage is the only ground for divorce.
• There are three ways to establish marriage breakdown:
i. Separation (no fault)
ii. Adultery (fault)
iii. Cruelty (fault)
But the clear trend of the law is to remove fault from most marital
disputes – as it usually takes one year to bring a contested matter to
trial anyways
1. Separation
• The parties must actually be living separate and apart at the time
they file for a divorce.
• They can begin proceedings any time after separation, but the
divorce cannot be granted until they have been separated for at
least one year.
Separation
• There is no process for getting a legal separation.
• A couple are considered separated when they are living separate
and apart and at least one of them has the intention to be
separated.
• They are not considered separated unless at least one of them
intends to end the marriage.
Can Spouses Live Separate and Apart Under the
Same Roof?
• Yes. It is possible to be living separate and apart, even if the
parties are living in the same home.
• They must meet the following conditions to be considered living
separate and apart
i. Occupying separate bedrooms
ii.No sexual relations
iii.Little if any communication, between them
iv.Neither party performs domestic chores for the other party
v.Eating meals separately
vi.No social activities together (see the Divorce Act, s. 4(l)(i)
2. Adultery
• If one of the spouses can prove adultery, there is no need to wait for
one year. The divorce can be granted immediately.
• Case law defines adultery as:
“consensual sexual intercourse between a married person and a person
who is not his or her spouse.”
Adultery
• The spouse who starts the divorce proceedings cannot rely on his
or her own adultery, but only on the other spouse’s.
• The adultery must have taken place after the couple were
married.
• A spouse who finds out that his/her spouse cheated prior to
marriage, cannot obtain a divorce based on adultery.
3. Cruelty
• A spouse can also obtain a divorce based on cruelty.
• If cruelty is proven, there is no waiting period.
• The divorce would be granted immediately.
• In order to prove cruelty, a spouse would have to show that
the other spouse treated him or her with such cruelty as to
make it impossible for the two of them to continue living
together.
Cruelty
• The Divorce Act does not define cruelty.
– Examples of cruelty include verbal abuse and physical abuse,
false accusations of infidelity, domineering and demeaning
conduct etc.
Bars to Divorce
•A court cannot grant a divorce unless the judge has explored a few
areas. These include the following:
•There are three major bars to divorce:
1. Collusion
2. Connivance
3. Condonation
4. Reasonable arrangements for child support
1. Collusion
• There cannot be any collusion.
• Collusion is defined as “an agreement or conspiracy for
subverting the administration of justice, and includes any
agreement, understanding or arrangement to fabricate or
suppress evidence or to deceive the court.”
• Basically, the court must be assured that the evidence regarding
the grounds for divorce is genuine, and the court is not being
misled.
• If the court finds collusion on the part of the applicant, it must
dismiss the divorce.
• Collusion is an absolute bar to divorce on any ground.
An Example of Collusion
• Zhang Wei and Wang Fang have just separated. They do not
want a year to be divorced, so Wang Fang suggests to Zhang Wei
that he sue her for divorce based on adultery.
• They agree that Wang Fang will say that she committed adultery
with a colleague, even though this is a lie.
• It would also be collusion if they lied about the date they
separated in order to obtain a divorce at an earlier date.
2. Connivance
• Applies to fault-grounds only (cruelty and adultery)
• Connivance occurs when the spouse who is filing for
divorce encourages the other spouse to commit a
matrimonial offence to provide grounds for divorce.
• Connivance is not an absolute bar to divorce.
• The court may grant a divorce if “the public interest would
be better served by granting the divorce”
An Example of Connivance
• Harry and Sally have just separated.
• They don’t want to wait until they have been separated for one
year, so Sally suggests to Harry that he have sexual intercourse
with a co-worker so that she can sue him for divorce based on
adultery. Harry agrees.
3. Condonation –
• Condonation only applies to faulty grounds (cruelty and adultery)
• A spouse condones an offence by forgiving the offending spouse.
• Once behavior has been condoned or forgiven, it cannot be used
any more to prove a breakdown of the marriage.
• The courts generally, are willing to grant divorce when
condonation has occurred, as the courts do not want to discourage
reconciliation
4. Reasonable Arrangements for Child Support
• The court must be satisfied that the parents have made
reasonable child support arrangements
• “Reasonable” means that the arrangement is in keeping with the
Child Support Guidelines.
• If this has not been done, the court will not grant the divorce
Defended (contested) Divorce
• When a person files for divorce, he or she can also include other
claims in the application, such as claims for custody, child or spousal
support or equalization of net family properties.
• The entire claim is filed with the court and then served on the other
party (known as the respondent).
• The respondent has 30 days to respond.
• Basically, the response (known as an “Answer”)addresses the other
claims.
Uncontested Divorce
• If a Respondent does not file an Answer, the divorce is considered
uncontested
• At this point, there are steps to be followed, but it is primarily
paper work.
• No-one has to go before a judge to plead their case.
Areas for Review Upon Separation or Divorce
• Entitlement to the following:
▪ A will
▪ Tax
▪ Property
▪ Pensions
▪ Powers of attorney
▪ Beneficiary designations
Part III: Domestic Contracts
Objectives:
• By the end of this lesson, you will be able to distinguish between
the different types of domestic agreements.
Domestic Contracts under the Family Law Act
• The Family Law Act allows parties to settle affairs between them
without going to court. There are different types of domestic
contracts, including:
1.Marriage Contracts,
2.Cohabitation Agreements,
3.Separation Agreements, and
4.Paternity Agreements ( we won’t be discussing paternity
agreements)
Marriage Contracts can include details about:
• A couple can create a marriage contract prior to getting married or
while they are married.
• Marriage contracts can deal with all types of issues including, the
couple’s rights and responsibilities during the marriage, upon
separation, divorce or death
• Specific issues could include:
• How to determine who owns property and how it will be divided at
the end of a marriage,
• Support rights and obligations, and
• Any other matter in the settlement of their affairs
Marriage Contracts Cannot deal with the following:
• Custody of or access to the couple’s children, and
• Any limits to a spouse’s right to possess the matrimonial home
Cohabitation Agreements
• A cohabitation agreement can be created by two people who plan on residing together
or who already reside together. They are not married and do not intend to marry.
• The contract can deal with various issues, including their rights during cohabitation, after
their separation or upon the death of one of them.
• Cohabitation Agreements can deal with any or all of the following matters:
• Ownership in or division of property
• Support obligations and,
• Any other matter in the settlement of their affairs
Cohabitation Agreements cannot deal with the
following:
• Cohabitation Agreements cannot deal with custody of or access to the couple’s
children.
• But they can deal with possession of property, following separation. This is
because cohabitating couples are not protected in this regard, when their
relationship ends.
• If the parties to a cohabitation agreement marry, the cohabitation agreement
automatically becomes a marriage contract. If a clause deals with possession of
property that becomes the matrimonial home, that clause would no longer be
enforceable.
Separation Agreements
• When a common-law or marital relationship ends, the individuals
can create a Separation Agreement, which can deal with any of the
following issues:
• Ownership of and division of property
• Child and spousal support obligations
• Custody and access rights
• Determination of education and moral training of the children
•There are no limits to what can be dealt with in a separation
agreement.
Form of a Domestic Contract
• Domestic Contracts must meet the following criteria:
• 1. They must be in writing,
• 2. They must be signed by each party to the contract,
• 3. They must be witnessed.
• Any amendments to the agreement, including cancelling the
contract, must be in writing, signed by both parties and witnessed.
Limitations of Domestic Contracts
1. Provisions that deal with education, moral training, or custody of or
access to children may be disregarded by a court if they are not in
the best interests of the children.
2. A court may disregard child support provisions if they do not appear
to be reasonable, having considered the Child Support Guidelines
and any other child support provisions in the agreement
3. Any provision taking effect on separation that stipulates that any right
of an individual is dependent upon his or her remaining chaste is
unenforceable although provisions tied to remarriage or cohabitation
are enforceable.
Things to Consider, When Separating
• Wills, Powers of Attorney and Designated Beneficiaries: If an individual who was
married, separates, any wills, documents with designated beneficiaries and powers of
attorney remain valid. As such, one should create a new will, and review powers of attorney
and designated beneficiaries, following separation.
• Insurance/health care coverage: Until divorce, generally, insurance or health care
coverage continues.
• Income tax benefits: Until divorce, the separated couple may be able to take advantage of
certain income tax benefits, including possible increases in deductions.
• Debt: Until one divorces, or at least creates a Separation Agreement, each individual is
responsible for the debt of the other.
What’s Next
• Complete the review questions for this week
• Study for and complete the quiz this week
• We will be exploring: Property Rights Upon Demise of Marriage
Quiz #2
This quiz will test you on the last 3 weeks of material, being the topics on: Business Organization Structures
(Part I and II), Marriage and Co-Habitation, Separation and Divorce, and Domestic Contracts:
•
•
•
•
Grade: The quiz will be worth 10% of your final grade
Format: The quiz will be multiple choice
Length: The quiz will include 20 questions
Content: You will not be tested on the textbook material for this quiz, but you can expected to be for the
final exams. The quiz will be based on lecture material, including slides, the lecture itself, and class
discussion. The materials for are posted on BlackBoard under “Weekly Learning Materials”.
• Delivery: The quiz will be available under the “Assessments” section on BlackBoard as of 12 PM EST on
Wednesday, November 17th. The quiz will remain open for 24 hours, meaning that you must open the test
and submit your answers by 12 PM EST on Thursday, November 18th. From the time you choose to open
the quiz, you will have 45 minutes to complete it, and then the quiz will autosubmit after that time.
• Academic Integrity: This quiz is designed to be written independently. There are safeguards in place to
prevent a benefit to students who collaborate with others. Please consult the syllabus for academic
integrity principles and violations. Be advised that the final exam will be written in a lockdown browser and
monitored.
Business and Family Law – Property Rights Upon
Demise of Marriage
Objectives
• By the end of this lesson, you will be able to:
• Determine how a couple divides their property at the end of a
marriage
Objective of the Family Property Provisions in the
Family Law Act
• The Family Law Act (FLA) sets out the rules about property rights
at the end of a marriage
• The goal of the FLA is to ensure that on marriage breakdown or
death, that each spouse will receive a fair share (which is usually
an equal share) of the value of assets accumulated during the
marriage.
What is Property?
Property – is any interest, present or future, vested or contingent, in real
or personal property
• Things of value: bank account, car, house, jewellery, pension
Vested – absolute right of title and ownership
Contingent – When a property is marked as contingent, an offer has
been accepted by the seller. Contingent deals are still active listings
because they are liable to fall out of contract if requested provisions are
not met. If all goes well, contingent deals will advance to a pending state.
When a property is marked as pending, an offer has been accepted by
the seller and all contingencies have been dealt with. Pending deals are
no longer considered active listings. A home will remain in the pending
state until all legal work has been processed
Property Rights and Marriage as a Partnership
The FLA recognizes that
i. child care,
ii. household management, and,
iii. financial provision are the joint responsibilities of the spouses, and
that there is an equal contribution, whether financial or otherwise,
in assuming these responsibilities. The equal contribution entitles
each spouse to the equalization of the net family properties
• s. 5(7) of the FLA
Who Can Apply for Property Division under the FLA?
• The FLA property provisions only apply to spouses.
“spouse” means either of two persons who:
(a) are married to each other, or
(b) have together entered into a marriage that is voidable or void, in
good faith on the part of a person relying on this clause to assert any
right.
• The property provisions do not apply to parties who are cohabiting, but
are not married
What is Net Family Property (NFP)?
• Net worth = assets – debts
• Net worth at separation minus net worth at the time of marriage =
the change in net worth over the course of the marriage
• Net family property (NFP) calculations in the FLA are net worth
calculations
• Essentially, net family property is the net worth of each spouse at
the end of the marriage.
Simplified Calculation for Net Family Property (NFP)
• NFP =
• Net worth (assets minus debts) at separation
• minus
• net worth (assets minus debts) at the time of marriage
Example: Simplified Calculation for Peggy’s NFP
• At the time that Peggy marries, she has $10,000.00 in the bank,
$10,000.00 in jewellery and a student loan of $10,000.00.
• When she separates, she owns ½ of a house (the total value of
the house is $500,000.00), and a business worth $50,000.00.
• She is also responsible for ½ of the mortgage on the house (the
total value of the mortgage is $200,000.00)
Peggy’s Net Family Property (NFP)
• NFP = (Assets minus debts at separation), minus (assets minus
debts at the time of marriage) = NFP
 Separation –
$300,000 – 100,000 = 200,000
 Beginning of marriage –
$20,000 – 10,000 = 10,000
$200,000.00 minus $10,000.00 = $190,000.00
• Peggy’s NFP at the time of separation is $190,000.00
Net Family Property
The formula for calculating net family property comes from the definition
in s. 4(1) of the FLA
“net family property” means the value of all of the property, except
excluded property, that a spouse owns on the valuation date, after
deducting,
(a) the spouse’s debts and other liabilities, and
Net Family Property
(b) the value of property, other than a matrimonial home, that the
spouse owned on the date of the marriage, after deducting the spouse’s
debts and other liabilities, other than debts or liabilities related directly to
the acquisition or significant improvement of a matrimonial home,
calculated as of the date of the marriage
Equalization of Net Family Properties
• The FLA provides for “equalization of net family properties”
• With some exceptions, each spouse is entitled to an equal share of
the sum of the net family properties, at the end of the marriage. This
is known as equalization of net family properties*
* Some types of property are not shared or are shared differently, such
as inheritances or the matrimonial home.
Example: Equalization of Net Family Properties
• David and Anna married in 2001 and separated in 2013
• At the end of the marriage, David’s NFP= $350,000 and Anna’s
NFP = $450,000
• Formula: (Larger NFP) minus (Smaller NFP), divided by 2 = the
amount that the spouse with the higher NFP must pay to the
spouse with the lower NFP, to “equalize” their net family property
values
• So that both spouses have the same value, Anna must pay David
$50,000.00 in an equalization payment
How is Property Shared?
• Spouses do not share property
• They share the value of the property
• As of the day of separation, spouses share equally in:
1. the value of most property that was acquired during the
marriage, and,
2. the increase in value during the marriage of property owned
prior to the marriage (with some exceptions)
Sharing Property Acquired During the Marriage
• George and Elaine were married.
• During the marriage, George bought a painting for $10,000.00.
George and Elaine separated and at the time of separation, the
painting was worth $100,000.00.
• George and Elaine will share equally in the full value of the
painting ($100,000.00), because the property was purchased
during the marriage.
Sharing of Increased Value in Property that was
Acquired Prior to Marriage
• George bought a painting for $10,000.00.
• When he married Elaine, the painting was worth $20,000.00.
When he and Elaine separated, the painting was worth
$100,000.00.
• George and Elaine will share equally in the value that the painting
increased by, during the marriage. They will share $80,000.00 in
value.
18
Property acquired/bought during marriage is shared, regardless
of who paid for it*
• *with some exceptions- see excluded property, s. 4(2)
• Aliyah and Mary were married on June 1, 2006. They separated
on May 1, 2011.
• Mary bought a stamp collection in July, 2007 for $100,000.00. The
stamp collection was valued at $200,000 on May 1, 2011.
• Result: Aliyah and Mary each get $100,000 – they both share in
the value (on separation date) of the property that was acquired
during marriage, even though Mary used her own funds to pay
for it.
Triggering Events for Equalization of Net Family Property
There are five triggering events (FLA – s. 5)
1. A divorce is granted
2. The marriage is declared a nullity
3. Spouses are separated and there is no reasonable prospect
that they will resume cohabitation
4. One spouse dies
5. A serious danger occurs while the couple are married and
living together that one spouse may “improvidently deplete”
his/her net family property
Valuation Date
The valuation date is tied to the triggering events. In fact, it is
generally the date of the triggering event.
FLA s. 4(1)
Valuation date is the earliest of the following dates:
▫ the date the spouses separate and there is no reasonable
prospect of resuming cohabitation
▫ the date of divorce
▫ the date the marriage is annulled
▫ the date before the date on which the first spouse dies, and
▫ the date an application based on improvident depletion is
commenced
Limitation Period
• The limitation period for applying for property division is the earliest
of:
a. 2 years after the date the marriage is terminated
b. 6 years after spouses separate or
c. 6 months after the death of the first spouse
There is no limitation period for an application based on improvident
depletion
(FLA s. 7(3)
What is Excluded Property? s. 4(2)
Certain types of property that a spouse owns on valuation day, are
not included in the spouse’s NFP, including:
1.Property other than a matrimonial home that came by way of gift
or inheritance from a third party (someone outside of the marriage)
after the date of the marriage
2. Income from a gift or inheritance if the donor or testator has
expressly said that it is to be excluded from the NFP
Excluded Property Con’t
3. Damages or settlement for personal injuries, nervous shock,
mental distress or loss of guidance, care and companionship
4. Proceeds of a life insurance policy
5. Property other than a matrimonial home into which any of the
above property can be traced
6. Property that the spouses have agreed by domestic contract to
exclude from a spouse’s Net Family Property
Inheritance Acquired Prior to Marriage
• Property is excluded under s. 4(2) only if it was acquired during
the marriage.
Eg. Joe inherited a coin collection worth $25,000.00 from his Uncle
Bob, before he married Carole. He and Carole were married for 20
years and at the time of separation, the coin collection was worth
$40,000.00.
▫ This inheritance was not acquired during the marriage. Therefore,
it is treated as any other pre-marriage asset. Joe only has to
share the increase in value of the coin collection that occurred
during the marriage. Joe has to share $15,000.00
Inheritance Acquired During Marriage
▫ Joe inherited a coin collection worth $25,000.00 from his Uncle
Bob, while he was married to Carole.
▫ When Joe separated from Carole, the coin collection was worth
$40,000.00.
▫ This inheritance was acquired during the marriage.
▫ It is excluded property and does not have to be shared.
▫ Joe does not have to share either the $25,000.00 or the
$15,000.00 increase in value.
Income and Inheritances and Gifts
• Income from a gift or inheritance is excluded if the donor or
testator has expressly said that it is to be excluded from the NFP
Eg. Cheryl is married to Aisha.
• During the marriage, Cheryl inherits $25,000.00 in Google stock
from Aunt Sally.
• Aunt Sally’s will expressly states that Cheryl does not have to
include any income earned on the shares in an NFP calculation.
Income and Inheritances and Gifts
• Cheryl and Aisha separate and at the time of separation, Cheryl
has received $15,000.00 in dividends on the stock.
• Cheryl has been very careful to keep all of the income earned on
the Google shares in a separate bank account.
• Cheryl does not have to share the value of the Google shares or
the value of the income earned on the Google shares.
Income and Inheritances and Gifts
• Income from a gift or inheritance is excluded if the donor or testator has
expressly said that it is to be excluded from the NFP
• Eg. Cheryl is married to Aisha. During the marriage, Cheryl inherits
$25,000.00 in Google stock from Aunt Sally. Aunt Sally’s will is silent about
income earned on the shares. Cheryl and Aisha separate and at the time of
separation, Cheryl has received $15,000.00 in dividends on the stock. Cheryl
has been very careful to keep all of the income earned on the Google shares
in a separate bank account. Even so, Cheryl does not have to share the
value of the Google shares, but she must share the value of the income
earned on the Google shares.
Determination of Excluded Property
• During Harry and Sally’s marriage, Sally’s father died, leaving
Sally Microsoft shares worth $20,000.00. When Harry and Sally
separated, the shares were worth $50,000.00. Because these
shares were inherited during the marriage, they are excluded from
Sally’s NFP, and Harry does not get to share in their value.
Determination of Excluded Property
• If Sally’s father had died before her marriage to Harry, the result
would be different.
• Sally would have to share with Harry the increase in value of the
shares because the shares would not be excluded from Sally’s
NFP.
• Sally would be allowed to deduct only the value of the shares as
of the time of the marriage.
Determination of Excluded Property
• If the shares were worth $20,000.00 when she inherited them,
$30.000.00 when she married Harry, and $50,000.00 when she
and Harry separated, the shares would be included in Sally’s NFP
at the V-day value of $50.000.00,
• And she would be able to deduct their marriage-day value of
$30,000.00.
• Harry would be entitled to a share of the $20,000.00 increase in
value during the marriage.
The Matrimonial Home
▫ Definition in s. 18 – property in which one or both spouses has an
interest and that was at the time of separation ordinarily occupied by
the spouses as their family residence.
▫ Special treatment of the matrimonial home in the NFP calculation:
 If the matrimonial home was owned at time of marriage, and is still
owned at the date of separation, and is used as a matrimonial home,
the spouse cannot deduct its marriage-date value from his or her NFP
Impact of Ownership on NFP Calculations
▫ Who holds title to an asset has a major impact on the NFP of
each spouse
Matrimonial Home (MH) is in Peter’s name only
MH is in Wendy’s Name Only
MH is in Wendy’s and Peter’s Names
Formula for Calculating NFP
1.List and value amounts for all property owned by the spouse on
valuation day (V-day), including excluded property.
2.Deduct the value(s) for excluded property from the Step 1 total.*
* Because of the disclosure requirements of s. 8, it is necessary to list
all property owned on valuation day in Step 1 (even though it is
excluded property), and then to list and deduct the value of the
excluded property in Step 2
Formula for Calculating NFP Con’t
3. List and value all debts owed by the spouse at V-day, and deduct
the total of these debts from the Step 2 total *
*If this value works out to be a negative number, it becomes 0 (zero).
4. Calculate property owned at date of marriage:
a.List and value amounts for all property other than a matrimonial
home that was owned at date of marriage
b.List and value all debts owed at date of marriage
c.Deduct total value of debts, other than debts related to the
matrimonial home, from total value of assets
5. Deduct Step 4 total from Step 3 total
What assets should be included for an NFP calculation?
• Zora had a bank account of $10,000 when she got married. Does she have to
“share” this with Elena (her spouse)?
• Elena inherited a cottage from Aunt Jen 2 years after marriage. Does Elena
have to share the value of this cottage with Zora?
• The court awarded Zora $80,000 in damages related to a work accident. Does
Zora have to share this with Elena?
Equalization of NFP
• Calculate equalization payment
Greater NFP – Lesser NFP
2
• Formula: (Larger NFP) minus (Smaller NFP), divided by
2 = the amount that the spouse with the higher NFP
must pay to the spouse with the lower NFP.
• This is known as an equalization payment.
Equalization Upon Death
• Death is one of the 5 triggering events:
• s. 6 of the FLA has provisions that protect a spouse who has not
received his or her fair share of the estate of his/her spouse
• s. 6 states that a married spouse is allowed to elect to set aside the
will of his or her deceased spouse, and choose to receive an
equalization payment, instead
• The election to set aside the will must be made within six months of
the date of the spouse’s death.
s. 6 – Election
Spouse’s will
When a spouse dies leaving a will, the surviving spouse can
choose either to take under the will or to receive an equalization
payment.
Spouse’s intestacy
When a spouse dies and has not left a will (intestate), the
surviving spouse can choose to inherit according to the rules of
intestacy or to receive an equalization payment.
Property outside of the estate
6(4) A surviving spouse who elects to take under the will or inherit
according to the rules of intestacy (if there was no will), shall also
receive the other property to which he or she is entitled because of
the first spouse’s death.
What Happens if the Surviving Spouse chooses NFP?
s. 6(5) The surviving spouse shall have both NFP and the gifts
mentioned in the will, if the will says as much
s. 6(8) If the will does not say as much, the gifts in the will are
revoked
s. 6(9) If there is no will, and the surviving spouse chooses NFP, he
or she is deemed to have said no to inheriting under the rules of
intestacy
What Happens if the Surviving Spouse chooses NFP?
• The surviving spouse can still receive life insurance proceeds,
lump sum death benefits and property by right of survivorship (e.g.
any property that was owned as a joint tenancy with the spouse who
has passed away)
 but these amounts are credited against the NFP equalization
amount
 and if these amounts are higher than NFP equalization, the
personal representative may recover the excess
Example: NFP or Equalization?
• Rahim dies and leaves an estate of 2.1 million dollars.
• In his will, he leaves his wife Narit $100,000.00 and the balance of his estate is
left to his secretary.
• Narit has six months to decide whether to go with the will or to decide on an
equalization payment.
• In order to do so, Narit must figure out her NFP and that of Rahim’s.
• Narit’s NFP is 1 million dollars.
• To calculate equalization –
2.1 million minus 1 million/2 = $550,000.00
• On the face of it, it appears that Narit may be better off to set aside the will and
file for an equalization payment, but…..
•
But certain credits are applied to (subtracted from) her equalization
entitlement. They are:
a. Benefits payable to the spouse according to a life insurance policy on
the life of the deceased spouse;
b. Lump sum benefits payable to the spouse pursuant to a pension or
similar plan on the death of the deceased spouse and,
c. The value of property or a portion of property to which the surviving
spouse becomes entitled by right of survivorship, on the death of the
deceased spouse
• In this case Narit and Rahim were joint owners of a home that was
worth 1.1 million dollars, so she receives $550,000.00 by way of
survivorship.
• The “credit” eliminates her equalization claim.
• As such, it is best for her to take the survivorship interest and the
100,000.00 bequest in the will.
Election Process
▫ Election is to be made in the prescribed form within 6 months after death –
ss.10
▫ If the spouse does not make an election to go with NFP, he or she is deemed
to have elected to take under the will/intestacy – ss. 11
▫ No distribution may be made under the estate until 6 months have passed
unless the surviving spouse consents or the court authorizes such action–
ss. 14
▫ No distribution may be made once an application for NFP equalization has
been started unless the surviving spouse consents or a court authorizes the
distribution – ss. 15
What is the Matrimonial Home ?
• s. 18 … every property in which a person has an interest and that is or,
if the parties have separated, was at the time of separation ordinarily
occupied by the person and his or her spouse as their family
residence.
• It is possible to have any number of matrimonial homes – e.g. cottage
and city residence
Designation – s. 20
• One or both spouses may designate a property owned by one or
both of them as a matrimonial home by registering the prescribed
designation form on the title to the property
• On designation by both spouses
▫ the designated property becomes the matrimonial home of the spouses
and
▫ any other property that is not also designated by both spouses ceases to
be a matrimonial home
• Designation by one spouse only does not affect the status of
other potential matrimonial homes
Disposition and Encumbrance –s.21
• A spouse may not dispose of or encumber the matrimonial home
unless:
1. the other spouse consents
2. the other spouse has released all of his or her rights to the
matrimonial home, by way of separation agreement
3. a court order authorizes the transaction, or
4. another property has been designated by both spouses as a
matrimonial
Disposition and Encumbrance –s.21
• If a spouse unlawfully transfers or encumbers the matrimonial home, a
court may make an order that the mortgage or transfer is not valid if
the transferee or mortgagee was aware that property was a
matrimonial home or was acting in concert with the spouse
• However, if the purchase or mortgage was made in good faith by a
person who had no knowledge that the property was a matrimonial
home, the court cannot make an order invaliding the purchase or the
mortgage.
Rights of Unmarried Spouses
• The property provisions of the FLA do not apply to unmarried
spouses
• Division of property is determined on the basis of ownership using
legal and equitable principles
• The matrimonial home provisions of the FLA do not apply
What’s Next
• Complete the review questions for this week
• Assignment #2 will be released next week
• We will be exploring: Child and spousal support
1
Business and Family Law – Child and
Spousal Support
Part I: Child Support
Objectives:
• By the end of this part of the lesson you will be able to:
• Describe parenting arrangements
• Calculate child support owing according to the Child Support
Guidelines
• Describe the instances when the Table amounts may not be
applied
• Explain how tax is handled for child support
4
Child Support – An Ongoing Obligation
• Parents have an obligation to provide support for their children,
whether they are married, cohabiting, separated or divorced
• Child support is determined in accordance with the Child Support
Guidelines
Objectives of the Child Support Guidelines
• To ensure a fair standard of support
• To reduce conflict
• To improve efficiency
• To ensure consistent treatment of parents and children
6
Child Support Tables
• The tables set out the amount of monthly child support payments.
Payments are based on:
1. the annual income of the paying party, and
2. the number of children
• There are separate tables for each province. The amounts vary
because of the differences in provincial income tax rates
• The courts use the table for the province in which the paying party
ordinarily resides, at the time of the application
7
Table Amount – Calculation Example
Simplified Table
• The monthly amount to be paid in child support for an income of
$72,500.00 and one child is $677.00 per month
• The monthly amount to be paid in child support for an income of
$72,500.00 and two children is $1103.00 per month
8
The Child Support Tables are not always applied
• The courts have the discretion not to apply the table amounts if:
1.The child is over the age of majority
2. The Income of the paying party is over $150,000
3. The paying party is not the natural parent of the child
4. The parties split or share custody
5. The application of guideline amounts would result in undue
hardship
1. The Child is Over the Age of Majority
• When the child is 18 or over (in Ontario) or over, the court has the
discretion not to award the table amount.
• The court will award the table amount unless it considers the
amount to be inappropriate.
• The court looks at the circumstances of the child and the financial
ability of each parent to contribute to the support of the child.
2. Income Over $150,000.00
• There is a special formula used for incomes that are over
$150,000.00.
• The court begins by calculating what support would be according
to the formula, but then has discretion regarding any amount over
the base amount.
3. The Paying Party is Not a Natural Parent
• A person may have to support a child who is not his or her
biological or adopted child.
• This is likely to occur when the person has treated the child as his
or her own child.
• But the court has discretion regarding the amount.
12
4. a. Split Custody
• Split custody – the parents have more than one child and each
parent has custody of one or more of the children
• The amount of child support paid is the difference between the
amount each parent would pay to the other, if a support order were
sought against each parent
13
4.b. Shared Custody
• Shared custody – a parent exercises access to or has physical
custody of a child for not less than 40% of the time over the course
of a year
• The court sets the amount of child support by taking into account
the:
▫ table amounts for each parent
▫ increased costs of shared custody arrangements; and
▫ “condition, means, needs and other circumstances” of each
parent and of the child
Undue Hardship
• The court can award a different amount than the Guidelines suggest, if
the court finds that ordering the Guideline amount would cause a
parent or spouse or child to suffer undue hardship. The
circumstances that may cause undue hardship include:
• The parent or spouse has reasonably incurred an unusually high level
of debt
• The parent or spouse has unusually high access expenses
• The parent or spouse is obliged by a court order, judgment or
separation agreement to support a person
• The spouse has a legal duty to support another child, or
• The parent or spouse has a legal duty to support someone who is ill or
has a disability.
15
Continuing Obligation to provide income information
• A spouse who is paying child support, must on the written request
of the other spouse provide financial information
• The request to provide financial information cannot be made
more than once a year.
16
Tax Treatment of Child Support
• Payments are not taxable in the hands of the receiving party.
• Nor are they deductible by the paying party, for income tax purposes.
Part II: Spousal Support
Objectives:
• By the end of this lesson, you will be able to:
• 1. Distinguish between compensatory and non-compensatory
spousal support claims
• 2. Describe and calculate various spousal support situations
• 3. Describe the tax implications for period and lump sum spousal
support
19
Spousal Support and First Steps
• The first thing to consider when someone wants to make a spousal
support claim, is whether or not there is entitlement.
• Entitlement falls into one or both of the following categories:
1. Compensatory claims – based on the recipient’s economic loss or
disadvantage because of the marriage
2. Non-compensatory claims – based on need
Rob and Laura
Rob and Laura were married when they were in their mid-20’s.
Laura was working as a typist and Rob was working as a television
comedy writer. Rob and Laura had their first child three years later.
The couple agreed that Laura should stop working to care for the
child. Over the next nine years, Rob and Laura had three more
children. Laura continued to stay home as a full-time mother. Rob
continued to work in television and was very successful. Rob and
Laura recently separated after more than 25 years of marriage.
Rob and Laura con’t
The only child still at home is the youngest, aged 16. The oldest
child is living on his own, and the other two children are in university.
Laura would like spousal support from Rob.
There is little doubt that Laura is entitled to spousal support. While
Laura no longer needs to stay home to care for the children, she will
find it very difficult to be self-supporting. She has not worked for 25
years because of the role that she and Rob agreed she should play
in the family, and her only previous work experience is as a typist.
When she worked as a typist, there was no such thing as an office
computer. In all likelihood, her skills would be considered out-dated.
22
Amount and Duration of Support
Once, it has been determined that there is entitlement, quantum and
duration need to be calculated.
1. Quantum of support = the amount of support to be paid
2. Duration of support = how long support is to be paid
It May Be Difficult to Find Work, After Not Working for
Many Years
•Even though there is a statutory obligation to be self-supporting, the
courts have recognized that a spouse who has been out of the work
force for a number of years may never be able to be completely selfsupporting
•In order to calculate the appropriate amount to be paid, if any, assets,
debts, income and expenses need to be considered.
Spousal Support Advisory Guidelines (SSAG)
• The Spousal Support Advisory Guidelines set out the considerations
and formulas to be used to determine quantum and duration
• Unlike the Child Support Guidelines, the SSAG are not legislated
• Instead, they operate on an advisory basis to help determine both the
quantum and duration of spousal support
• The Guidelines do not deal with entitlement, which must be
established before the amount and duration of support is calculated
Two Formulas
• There are two basic spousal support formulas:
1. Without child support formula – used when there are no
dependent children and there is no child support obligation
2. With child support formula – used if there are dependent children
for whom child support must be paid by either spouse
• Both formulas produce ranges for both the amount and duration of
support.
The Without Child Support Formula
• The amount and duration of support is calculated by looking at the
difference between the spouses’ gross incomes (called the gross
income difference) and the period of time the couple cohabited
(before as well as during the marriage)
• Amount of support will be 1.5–2% of the gross income difference
for each year of cohabitation up to maximum range of between
37.5-50% (for marriages of 25 years or more).
• The upper limit is the amount that would result in equalization of the
spouses’ incomes (called the net income cap)
The Without Child Formula Con’t
• Duration of support is .5-1 year of support for each year of
cohabitation, with duration becoming indefinite after 20 years of
marriage
• The formula produces a range for both the amount and duration
of support
• Basis of entitlement – compensatory or non-compensatory –
determines the location within the range
Example 1: A Short Marriage
Karl and Beth were married for four years. They did not have children.
Beth was 25 when they met and Karl was 30. When they married, Beth
was a struggling artist. Karl is a music teacher with a gross annual
income of $60,000. Beth now earns $20,000 per year, selling her work
and giving art lessons to children.
A Short Marriage Con’t
Entitlement is a threshold issue before the Advisory Guidelines
apply.
On these facts, given the disparity in income and Beth’s limited
income at the point of the marriage breakdown, entitlement is likely
to be found.
To determine the amount of support under the formula:
Determine the gross income difference between the two parties:
$60,000 − $20,000 = $40,000
A Short Marriage Con’t
Determine the applicable percentage by multiplying the length of the
marriage by 1.5 to 2 percent per year:
1.5 × 4 years = 6 percent to
2 × 4 years = 8 percent
Apply the applicable percentage to the income difference:
6 percent × $40,000 = $2,400/year ($200 per month) to
8 percent × $40,000 = $3,200/year ($267 per month)
Duration of spousal support = (0.5 to 1) × 4 years of marriage = 2 to 4
years
Result: Support is in the range of $200 to $267 per month for a
duration of 2 to 4 years.
Example 2: A Medium-Length Marriage
David and Jennifer were married for 12 years. It was a second marriage
for both. David was 50 when they met. His gross annual income is
currently $100,000 per year. Now 62, he is in good health, loves his
work, and has no immediate plans to retire. Jennifer was 35 when they
met, while Jennifer was working in his office. She had been a
homemaker for 10 years during her first marriage and had received
time-limited support. When they met she was working in a low-level
clerical position earning $20,000 gross per year. Jennifer, now 47, did
not work outside the home during the marriage.
Example 2: A Medium-Length Marriage Where the “Rule of 65”
Applies
• Entitlement is a threshold issue before the Advisory Guidelines are
applicable.
• Given the length of the marriage and Jennifer’s lack of income,
entitlement to support on non-compensatory grounds is likely.
Medium Length Marriage Con’t
The amount of support on an income difference of $100,000 and a
12-year marriage would be calculated as follows:
18 percent × $100,000 = $18,000/year ($1,500/month)
to
24 percent × $100,000 = $24,000/year ($2,000/month)
Medium Length Marriage Con’t
 The durational range is 6 to 12 years based on the length of
marriage.
• The result under the formula is support in the range of $1,500 to
$2,000 a month.
Example 3: A Long Marriage
• John and Mary were married for 28 years.
• They had a traditional marriage. John worked his way up the
career ladder and now earns $100,000 gross per year.
• Mary stayed home and raised their two children, both of whom are
now grown and on their own.
• Mary is 50 years old, and has no income. John is 55.
Example 3: A Long Marriage
• Based on this fact pattern, there is clear entitlement to spousal
support.
• Because the length of the marriage is over 25 years, the maximum
range for the amount applies—37.5 to 50 percent of the gross
income difference (capped at equalization of net incomes).
Long Term Marriage – Con’t
The range would be:
37.5 percent × $100,000 = $37,500/year ($3,125 per month) to
50 percent × $100,000 = $50,000 ($4,167/month, capped at $4,048)
 Duration is indefinite because the marriage is 20 years or over in
length.
• The formula results in a range for support of $3,125 to $4,048
per month for an indefinite duration, subject to variation.
The With Child Support Formula
• The With Child Support formula is actually a group of formulas
depending on the custody and child support arrangements for the
children:
▫ Basic formula – used where the recipient spouse has primary care
of the children and is receiving both child and spousal support
▫ Shared custody formula – used where the spouses share custody
of the children
The With Child Support Formula
▫ Split custody formula – used where the spouses have more than
one child and each spouse has custody of one or more children
▫ Custodial payor formula – used where the paying spouse has
custody of the children
▫ Adult child formula – used where the only child support obligation
exists with respect to children over the age of majority
• Calculation of these formulas requires computer software
40
Tax Treatment
• Periodic spousal support payments (support that is paid on a
monthly basis) are taxable as income in the hands of the
receiving spouse and deductible by the paying spouse.
• A lump sum spousal support payment is not deductible for the
payor and tax free for the recipient
What’s Next
• Complete the review questions for this week
• Complete Assignment #2, due at 11:59 PM next Tuesday, April
13th
• We will be doing an exam review next week
Assignment #2
• This assignment will evaluate your understanding of weeks 9 and 10 of the course materials,
concerning business organization structures. The purpose of this assignment is to evaluate your ability
to understand, apply, and reason through these concepts in relation to a case. You will be marked on
your reasoning and the quality of your writing, which you will see in the detailed grading rubric posted.
The details of the assignment are as follows:
▫ Grade: The assignment will be worth 15% of your final grade.
▫ Format: The assignment will contain short answer questions to be answered in relation to a fact pattern. One
question will ask you to answer in relation to a case, being E.M. Plastics v. Abby Signs and Lardeur, 2009 BCPC
18.
▫ Length: The assignment will contain 5 questions, each worth 20%. You are expected to write between 150-300
words per question.
▫ Delivery: The assignment will be available under the “Assessments” section on BlackBoard as of Tuesday, April
6th, after class. The assignment is due the following week, on Tuesday, April 13th, at 11:59 PM. You will be
deducted 5% per day if the assignment is submitted after this time without prior approval or accommodation.
▫ Academic Integrity: This assignment is designed to be completed independently. Everything is to be written in
your own words. Please consult the syllabus for academic integrity principles and violations.
Business and Family Law – Final Exam Review
and Wrap Up
Part I: Final Exam Review
Objectives
• Be reviewed on the core concepts we have covered during the
last five weeks of class:
▫ Week Nine: Business Organization Structures (Part I)
▫ Week Ten: Business Organization Structures (Part II)
▫ Week Eleven: Marriage and Co-Habitation, Separation and Divorce, and
Domestic Contracts
▫ Week Twelve: Property Rights Upon Demise of Marriage
▫ Week Thirteen: Child and Spousal Support
Week Nine: Business Organization Structures Part I
• Objectives
▫ Identify and describe sole proprietorships
▫ Explain the advantages and disadvantages of a sole
proprietorship
▫ Distinguish between a general partnership, a limited partnership
and a limited liability partnership
▫ Explain the advantages and disadvantages of a partnership
Week Nine: Business Organization Structures Part I
• Sole proprietorships
▫ The sole proprietorship is the simplest form of business organization.
▫ The sole proprietor is exclusively responsible for:
 Performing all contracts entered into (e.g. sales, contractors and
employees)
 All torts committed personally in connection with the business.
▫ Recall legal requirements of an sp and advantages and
disadvantages
Week Nine: Business Organization Structures Part I
• Partnerships
▫ A partnership is a form of business organization that comes into
existence when two or more people carry on business together with
a view to a profit.
▫ Characteristics of a partnership
▫ Creditworthiness and income tax considerations of partnerships
▫ Factors a court will consider when determining if a partnership exists
▫ The doctrine of mutual agency: each partner, when acting in the
usual course of partnership business, binds the partnership.
▫ Liabilities and managing risk in a partnership, limited partnerships
Week Ten: Business Organization Structures Part II
• Objectives
▫ Explain how corporations come into existence
▫ Explain how a corporation is different from any other type of business
structure
▫ Describe the roles and rights of directors and shareholders
Week Ten: Business Organization Structures Part II
• Corporations
▫ The incorporation process
▫ Relevant legislation: CBCA and OBCA
▫ The nature of a corporation – same rights and responsibilities as a natural
person
▫ Implications of separate legal existence
 A shareholder can be an employee or a creditor of the corporation. This is because
the shareholder and the corporation are two distinct entities, from a legal perspective.
 For the same reason, the corporation is unaffected if a shareholder dies or withdraws
from the business.
 The corporation is treated separately for income tax purposes. Income or losses that
are generated through the business are attributed to the corporation and taxed at the
corporate level.
▫ Courts still have discretion to ignore separate legal existence
Week Ten: Business Organization Structures Part II
• Shareholders
▫ Shareholders limited liability: Shareholders have limited liability for the
debts of the corporation, and the creditors may look only to the assets
of the corporation to satisfy their claims.
▫ Management and control of the corporation and division of corporate
power
▫ Shareholders rights: Shareholders have many rights, but they do not
own the business that is carried on by the corporation, nor the
property belonging to it.
▫ The importance of a shareholder agreement
Week Eleven: Marriage and Co-Habitation,
Separation and Divorce, and Domestic Contracts
• Marriage and Co-Habitation
▫ Objectives
 Distinguish between a marriage and a common law relationship
 Identify jurisdiction with respect to marriage, and
 Discuss the requirements of a valid marriage (both civil and religious)
 Explain the difference between a void and voidable marriage
Week Eleven: Marriage and Co-Habitation,
Separation and Divorce, and Domestic Contracts
• Marriage and Co-Habitation
▫ Definition of marriage
▫ Who has jurisdiction over marriage
▫ Legal capacity to marry: age, consanguinity, and marital status
▫ Formalities of marriage
▫ Requirements for a civil versus religious marriage
▫ Common law relationships
▫ Criteria for co-habiting
▫ Void versus voidable marriage
Week Eleven: Marriage and Co-Habitation,
Separation and Divorce, and Domestic Contracts
• Separation and Divorce
▫ Objectives
 Explain how to legally establish a marital breakdown
 Describe the bars to divorce, and
 Distinguish between an uncontested and a contested divorce
Week Eleven: Marriage and Co-Habitation,
Separation and Divorce, and Domestic Contracts
• Separation and Divorce
▫ Breakdown of the marriage is the only ground for divorce.
▫ There are three ways to establish marriage breakdown:
 Separation (no fault)
 Adultery (fault)
 Cruelty (fault)
▫ Bars to divorce
 Collusion
 Connivance
 Condonation
▫ Contested versus uncontested divorce
▫ Areas for review upon divorce
Week Eleven: Marriage and Co-Habitation,
Separation and Divorce, and Domestic Contracts
• Domestic Contracts
▫ Objectives
 Distinguish between the different types of domestic agreements.
Week Eleven: Marriage and Co-Habitation,
Separation and Divorce, and Domestic Contracts
• Domestic Contracts
▫ The Family Law Act allows parties to settle affairs between them
without going to court. There are different types of domestic
contracts, including:
 Marriage Contracts,
 Cohabitation Agreements,
 Separation Agreements, and
 Paternity Agreements
▫ Form of a domestic contract
▫ Limitations of domestic contracts
▫ Things to consider when separating
Week Twelve: Property Rights Upon Demise of
Marriage
• Objectives
▫ Determine how a couple divides their property at the end of a
marriage
Week Twelve: Property Rights Upon Demise of
Marriage
• Goal of the Family Law Act
• Vested versus contingent property
• Marriage as a partnership
• Net Family Property:
▫
▫
•
•
•
•
•
•
•
Net worth = assets – debts
Net worth at separation minus net worth at the time of marriage = the change in
net worth over the course of the marriage
Sharing the value of property acquired prior to versus during the marriage
Valuation date
Excluded property
Income, inheritances, and gifts
The matrimonial home
Equalization upon death – section 6 election
Disposition and encumbrance
Week Thirteen: Child and Spousal Support
• Child support
▫ Objectives
 Describe parenting arrangements
 Calculate child support owing according to the Child Support Guidelines
 Describe the instances when the Table amounts may not be applied
 The child is over the age of majority
 The Income of the paying party is over $150,000
 The paying party is not the natural parent of the child
 The parties split or share custody
 The application of guideline amounts would result in undue hardship
 Explain how tax is handled for child support
Week Thirteen: Child and Spousal Support
• Spousal support
▫ Objectives
 Distinguish between compensatory and non-compensatory spousal
support claims
 Describe and calculate various spousal support situations
 The with child versus the without child formula
 Difference in outcome between a short, medium, and long term marriage
 Describe the tax implications for period and lump sum spousal support
Part II: Final Exam Information
Outline
• This final examination will test you on the last 5 weeks of material, being the topics
on: Business Organization Structures (Part I and II), Marriage and Cohabitation,
Separation and Divorce, and Domestic Contracts, Property Rights Upon Demise of
Marriage, and Custody and Support Arrangements. The details of the exam are as
follows:
▫ Grade: The exam will be worth 25% of your final grade.
▫ Format: The exam will include multiple choice, short answer, and long answer questions.
▫ Length: The exam will have 15 multiple choice questions (30 points total, 2 points per
question), 3 short answer questions (30 points total, 10 points per question), and 1 long
answer question (40 points total).
▫ Content: You will be tested on the textbook and lecture material for this exam.
▫ Delivery: The quiz will be available under the “Assessments” section on BlackBoard as of
9 AM EST on Tuesday, April 20. The test will be open for four hours, until 1 PM EST.
▫ Academic Integrity: This exam, as with all other assessments, is designed to be written
independently. The final exam
Respondus System
• To ensure academic integrity, this exam will be written in a lockdown
browser
▫ While in lockdown browser, you cannot access any other applications
▫ Respondus will be automatically launched through the assessment on
BlackBoard, at which time you will be prompted to close everything
▫ A calculator will be available to you on the test so you can complete
calculations there
• You will be virtually proctored through the Respondus Monitor system
▫ The system detects cheating and any unusual behaviour
▫ You cannot use a cell phone or any materials while writing the exam
Part III: Wrap Up
Feedback
• Be sure to fill out your SFQ (Student Feedback Questionnaire)
• In addition, I’m curious to know your thoughts about the course in
general
▫ Poll
▫ Feel free to offer comments and suggestions
Resources
• I am happy to be a resource to all of you once the course has
concluded, for matters including but not limited to:
▫ Questions about the LSAT
▫ Questions about law school admissions process
▫ Questions about the legal profession
▫ Questions regarding environmental, animal, or Indigenous law topics
▫ Peer editing and review
• Feel free to e-mail me at sarah.levy@georgebrown.ca or
sarah.levy@law.ox.ac.uk
Thank You!
Despite the current challenges, I commend you all on
your hard work and participation in this course. I
hope to be in touch with many of you going forward.
Best of luck with your final exam and all future
endeavours!
8:22
Expert Q&A
Barry and Hilda decided to end their marriage.
Hilda has retained you to advise her on two
separate issues.
Part 1
Hilda has been unhappy in her marriage for quite
some time and wants a divorce as soon as
possible because she is worried that barry will
change his mind. She has heard that in some
instances, one can obtain a divorce without
having to wait. In fact, a friend has told her that
an easy way to get a divorce is to tell the court
that you have committed adultery, even if you
have not. Hilda would like your advice on the
least problematic way to obtain a divorce. As well
she would like to know why a court might refuse
to allow a divorce.
Part 2
After following your advice. Hilda has
successfully divorced barry and the former
partners now want to determine how to divide
their property. Review the information below,
which outlines their assets and debts. Determine
how they will divide their property. Provide a
calculation and an explanation to support your
finding.
Barry
At the time of separation. Barry owned a house
jointly with Hilda. The house is worth
….
$500,000.00. The house is mortgage-free. Barry
does not have any debts.
At the time o
Done
At the beginning of the marriage. Barry Owned a
painting that he had inherited from his mother.
The painting was $20,000.00. He had a student
loan worth $20,000.00. He owned a car for
$5000.00. He had savings of $5000.00
Hilda
tien Hilde8:22
….
Expert Q&A
Haviny tu waIL. III Tall, a inicNIU TIAD Lviu fiti liial
an easy way to get a divorce is to tell the court
that you have committed adultery, even if you
have not. Hilda would like your advice on the
least problematic way to obtain a divorce. As well
she would like to know why a court might refuse
to allow a divorce.
Part 2
After following your advice. Hilda has
successfully divorced barry and the former
partners now want to determine how to divide
their property. Review the information below,
which outlines their assets and debts. Determine
how they will divide their property. Provide a
calculation and an explanation to support your
finding.
Barry
At the time of separation. Barry owned a house
jointly with Hilda. The house is worth
Done
$500,000.00. The house is mortgage-free. Barry
does not have any debts.
At the beginning of the marriage. Barry Owned a
painting that he had inherited from his mother.
The painting was $20,000.00. He had a student
loan worth $20,000.00. He owned a car for
$5000.00. He had savings of $5000.00
Hilda
At the time of separation. Hilda owned a house
jointly with barry. The house is worth 500,000.00
She continues to own her business, but it is not
doing well. It is now worth $350,000.00. She no
longer owns the IBM shares. She sold them
during the marriage, for $100,000.00.
At the beginning of the marriage. Hilda owned s
business worth $100,000.00. She had a loan
worth 50,000.00 and she owned IBM shares
worth $20,000.00