Failure to create separation agreement can lead to financial loss

On behalf of Peterson Stark Scott posted in Property Division on September 18, 2015.

When a relationship falls apart and a couple decides to part ways it is important to create a separation agreement. This is true regardless of whether the couple was married or in a common-law relationship. The failure to take this course of action could result in unintended financial consequences. A situation that recently played out in Vancouver illustrates this. It involves the division of proceeds from the sale of a house.

At the heart of this matter is the purchase of a home, by a married couple, almost 50 years ago. Several years after moving in, the couple split and the husband moved out. The couple never signed a separation agreement or divorced. The wife became involved with, and had a child with, another man. She continued to live in the house with her new family until her death 6 years ago.

At the time of the woman‚ death her estranged husband‚ name remained on the land deed. Several years after she died, the woman‚ estranged husband sought to sell the house‚Äîthe value of which had increased from $37,500 to $1.2 million‚Äîso that he could have his half of the proceeds. In response, the woman‚ son claimed that his mother and her estranged husband had entered into a verbal separation agreement. As a part of that agreement he said his mother agreed to not seek spousal support in exchange for any claim to the property being dropped. Her estranged husband denied that there was a separation agreement in place.

The B.C. Supreme Court agreed with the man and because there was not an agreement in place, despite not having paid anything toward the mortgage, determined the man was still entitled to one-half interest in the property. The judge ordered that the house be sold and the proceeds divided equally with the woman‚ son receiving credit for the mortgage payments made by his mother following the separation.

A separation agreement may seem like an unnecessary step when a marriage or common-law relationship ends. There are multiple ways in which it can be beneficial however. A lawyer who practices family law can be of assistance in creating one.

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