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Ask a Divorce Lawyer: What Is a Beneficial Interest in Property?

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WHAT YOU CAN AND CANT CONTROL IN THE DIVORCE PROCE

Brahm Siegel is a Toronto family law and divorce lawyer, mediator and arbitrator. He will answer your questions on all aspects of family law. Write to him at bsiegel@nathenssiegel.com.

Q: Can you explain the difference between a "legal" interest in property vs. a "beneficial" one? My lawyer has mentioned this a few times and says it's important to my case, but I'm too embarrassed to tell him I just don't get it.

A: This comes up all the time in my cases. A legal interest in property (usually, but not always, real estate) refers to whose name is on the paperwork. A beneficial interest means who really owns the property, having regard to the parties' contributions and intentions.

Q: Aren't these two interests usually the same?

A: Usually, but not always. Often, a self-employed individual will place property which he paid for and contributes to in the name of his spouse in order to protect the family from creditors. After separation, sometimes there is a dispute about whether the self-employed spouse should receive half the value of the property or not.

Q: Why does it matter? I thought all property is divided equally in family law.

A: It matters because in most provinces (they differ in respect of property law) property owned by the spouses is valued at a specific date. In Ontario, where I practice, they call this the "valuation day," which is usually the date the parties separate. Any increase in property post-separation belongs to the titled spouse and is not shareable, which means if a house increases significantly in value after separation, but only the titled spouse is the true owner, the non-titled spouse will not get to share in that increase.

Q: What kind of evidence does a spouse need to prove they have a beneficial interest?

A: The best kind of evidence is proof of monetary contributions to the property, both during and after marriage. Non-monetary contributions like time and effort in doing a renovation are significant too but harder to prove and quantify. Evidence that at one time the home was in joint names and of debt by the non-titled spouse at the time the home was put into the other spouse's name are also highly valuable.

Q: My partner just moved into my home. It's in my name. He is helping me with my mortgage payments. Does this mean he has a beneficial interest in my home?

A: Depending on the amount of the contribution and the length of time that's passed since you've been cohabiting, he may. The best bet is to consult a lawyer about a "cohabitation agreement," which we'll talk about in our next column.

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