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Understanding the Division of Assets and Debts in Divorce


One of the most challenging aspects of divorce proceedings is the division of assets and debts. It involves a complex process of distributing the marital property and liabilities accumulated during the marriage. This article aims to provide a comprehensive overview of how assets and debts are divided in a divorce.

Legal Principles Governing Division

The division of assets and debts in a divorce is typically governed by provincial and territorial laws in Canada. These laws aim to ensure a fair and equitable distribution of marital property. ‘Equitable’ does not always mean ‘equal,’ but what is considered fair and just in the circumstances.

Marital vs. Separate Property

The first step in dividing assets is to distinguish between marital and separate property. Marital property includes all assets and debts acquired during the marriage, regardless of whose name is on the title. Separate property refers to assets and debts owned by either spouse prior to marriage, inheritances, and gifts specifically given to one spouse.

Valuation of Assets and Debts

Once the marital property is identified, it must be valued. This process can involve appraisals of real estate, business valuations, and assessments of the value of pensions and investments. Debts are also assessed to determine their current value.

Factors Influencing Division

Several factors can influence how assets and debts are divided, including the length of the marriage, each spouse’s contribution to the marriage, including non-financial contributions, the financial needs and resources of each spouse, and the impact of the division on any children of the marriage.

Dividing Specific Types of Assets

Real Estate: The family home and other real estate properties are often the most significant assets. Options include selling the property and dividing the proceeds, or one spouse buying out the other’s interest. Retirement and Pensions: These are often subject to division. Special rules apply to the valuation and division of these assets. Business Interests: Dividing a business requires a valuation and may involve one spouse buying out the other or selling the business. Investments and Savings: These are usually divided equally unless there are exceptional circumstances.

Handling Debts in Divorce

Debts acquired during the marriage are typically considered joint responsibilities. This includes mortgages, car loans, credit card debts, and personal loans. Each spouse’s responsibility for these debts will depend on their ability to pay and other factors considered by the court.

Spousal Agreements and Negotiations

Couples have the option to negotiate the division of assets and debts outside of court. This can be done through direct negotiation, mediation, or collaborative law. Agreements reached can then be formalized in a separation agreement.

Court Intervention in Asset Division

If spouses cannot agree, the court will intervene to divide assets and debts. The court’s decision is based on the legal principles of fairness and equity, considering the unique circumstances of the marriage.


Divorce involves not just the emotional separation of two individuals but also the complex task of dividing shared assets and debts. Understanding these processes and seeking professional legal advice is crucial for anyone going through a divorce. Each case is unique, and the division of assets and debts should be handled with care to ensure a fair outcome for both parties.