Exemptions when Dividing Family Property: What You Need to Know

Many twists and turns are involved when dividing family property following a separation. There are special rules for dividing the family home, equitable claims that can be made, and many issues to consider. One such issue which can add complexity is exemption claims.

Exemptions can be claimed for items owned before marriage or before you became common-law spouses. Section 23 of The Family Property Act (Saskatchewan) provides for this. If you are eligible to claim an exemption, it will mean the value of that property is not subject to division (i.e. you will not have to share the value of that property with your spouse upon separation).

Here are six things you need to know about exemption claims:

  1. The definition of family property is broad under the Act. Examples of family property include items such as investments, bank accounts, land, personal property, etc. Generally, family property can be claimed as exempt if owned before the relationship.
  2. There are certain items that cannot be claimed as exempt. These include the family home and household goods which, generally, refers to property that is used for transportation (vehicles), household use (furniture, appliances, décor, etc.), and recreational use, but does not include antiques, artwork, jewelry, or anything used in a business or hobby.
  1. This means that if you owned a house prior to the relationship which your spouse moved into, in the vast majority of cases, you will be unable to claim an exemption for the house and it is presumptively equally divisible.
  2. Likewise, if you owned furniture before the relationship which you moved into your spouse’s house, you cannot claim it as exempt since it would be considered household goods.
  1. The value which can be claimed as exempt is limited to the fair market value of the property at the start of the relationship (the value at the date you are married or become common-law spouses). This means that, if the property grows in value over the course of the relationship, your spouse is, generally, entitled to share in that growth of value.  There are certain exceptions to this rule which will not be covered in this article.
  1. For example, if you owned an investment at the date of marriage and it grows by $50,000 over the course of the marriage, your spouse is entitled to share in that $50,000 growth in value.
  1. The exemption claim can be traced through the property.
  1. For example, if you were to cash in an investment worth $50,000 at the date of marriage and purchased artwork with it, the value of the artwork would be exempt up to the $50,000. Any increases in value over $50,000 over the course of the relationship would be shareable. 
  2. If you instead purchased a vehicle used for everyday driving, you would lose the exemption since that vehicle would be considered a household good.
  1. The fair market value of shares in a corporation as of the date of marriage/common-law is exempt. Any increase in value of the shares over the course of the relationship is, generally, shareable by your spouse.
  2. There are circumstances where an exemption claim will not be allowed if the Court finds that allowing the exemption would be unfair and inequitable. For example, if the property declines in value over the course of the relationship, it is generally unfair to allow the full amount of the exemption.

This article is intended to provide legal information only, not legal advice.  Dividing family property can be quite complicated. It is recommended that you seek the advice of a lawyer when considering the division of family property.

For further information, please contact:

Curtis P. Clavelle
Direct: 306-933-1341
Email: [email protected]

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