Calgary Tracing Exempt Property Lawyers 403-444-5503
Calgary Tracing Exempt Property Lawyers know that obtaining the proof of both the starting and ending value of an exempt property asset in a long relationship can present challenges. Things get even more tricky for Calgary Tracing Exempt Property Lawyers when an exempt property asset is:
- sold or converted into yet another asset or assets;
- it goes up in value or down in value; or
- worse yet gets mixed in with shared matrimonial property.
Calgary Tracing Exempt Property Lawyers know tracing of an exempt property requires an examination of documents, an analysis of cash flows in and out, a consideration of depreciation or appreciation and a thorough review of the use of an exempt property asset for family living or other expenses that can lead to the exempt property getting partly or wholly used up. Our Calgary Tracing Exempt Property Lawyers act in Calgary and deal with the same type of tracing issues for excluded property across BC. Call us toll free in BC or Alberta to get help on exempt property tracing issues at 1-877-602-9900.
Calgary Tracing Exempt Property Lawyers Note Interesting New Tracing Appeal
In MacFarlane v. MacFarlane, 2016 ABCA 183 the Alberta Court of Appeal allowed a wife’s appeal from a trial judge’s decision granting an exemption that the Court of Appeal said never should have been allowed.
The court reviewed the evidence on the starting value of a home and expressed some doubt on how accurate the assessed property value of the home was and then analyzed documents to see where the money went from the sale, what happened to it and then determined there was an error by the trial judge in assuming $100,000 remained of the starting value of the exempt property when in fact the evidence showed it had all been spent.
Courts Reasons That No Exempt Property Was Left After Tracing – Bolded For The Key Parts
 This appeal deals primarily with the distribution of matrimonial property.
 The Matrimonial Property Act, RSA 2000, c. M-8, was enacted to recognize the impact of marriage breakup on matrimonial property and to provide a legal framework for a fair and equitable division of such property. Accordingly, it is expected that property will be divided in accordance with the provisions of the Act and that in doing so courts will focus on the provisions of the Act. When there is an error in principle that goes to the heart of a property division, an appellate court is obliged to intervene. This is one of those cases.
 The Act essentially provides that property acquired during the course of a marriage is presumed to be split equally. Property that exists pre-marriage is exempt to the extent of its value as at the date of the marriage and there is no presumption as to how the increase in value should be split. It is in the discretion of the trial judge as provided for in s. 8. The discretion is not unbridled – it must be exercised within certain parameters.
 Exemptions must be proven on a balance of probabilities by the person seeking to claim them. Similarly, tracing exempt assets while not a completely accurate science, requires evidence and consideration of the legal principles developed in the jurisprudence since the Act came into effect in 1978. It is not enough to assert that there is an exemption where its existence, its amount and what ultimately happened with the funds is at issue. It is incumbent on a trial judge to direct his mind to the various issues and do a legal analysis having regard to those principles.
 The respondent claimed an exemption on funds from the August 2010 sale of his Fort McMurray home which he owned as at the date of marriage – July 11, 2009. He adduced no evidence as to the value of that home as at the date of marriage nor the extent of the mortgage on the home at that time. The tax assessment at the time showed a value of $413,000. Similarly no evidence as to the balance of the mortgage was provided. The respondent “ball parked” it at “240 some thousand”. Assuming that the tax assessment is a good marker of the property’s true value, which it most likely is not, and that the mortgage balance was $240,000, the extent of the exemption was $173,000. This, again, is the difference between the value of the home and the mortgage balance as of the date of marriage.
 However, that did not end the matter.
 On August 30, 2010 the respondent deposited the net sale proceeds of the August 2010 sale – $227,360.47 –into his Scotiabank personal line of credit. On September 1, 2010 the respondent transferred $145,569.45 from this account to pay out the mortgage on the appellant’s home. The appellant has agreed that the respondent be given an exemption credit of $72,784.72 ($145,569.45/2) on account of this payment. We accept, having regard to all the circumstances, that this is the fair treatment of these funds.
 The trial judge granted the respondent an exemption of $100,000 from his itrade account which he said came from the proceeds of his Fort McMurray house. This cannot be the case. The respondent allocated $145,569.45 of the $227,360.47 net sale proceeds to extinguish the mortgage on the Salter home. The difference is $81,791.02 ($227,360.47-$145,569.45), not $100,000. In addition, on the same day the respondent paid off the mortgage, he transferred $67,804.84 from his Scotiabank personal line of credit into the couple’s joint bank account. This left only $13,986.18 from the net sale proceeds of the respondent’s Fort McMurray property. Secondly, the evidence established that any available exemptions disappeared when the money ultimately went into the couple’s joint bank account. While it is well understood that tracing exemptions is not a perfect science and can be inferred, implied or presumed, there must be an evidentiary basis to support the exemption. Here the evidence makes clear that whatever amount was available was comingled with joint assets and as such, any exemption was lost.
Calgary Tracing Exempt Property Lawyers Warn Clients To Document Exempt Property values and Usage
In the end result the Court of Appeal allowed the wife’s appeal that there was no exempt property left at the end of the relationship and that the husband should be liable fully for debts he incurred on his own behalf after separation. The court reduced the equalization payment dramatically holding:
“…the appellant must make an equalization payment to the respondent of $58,903.86. This is a much smaller equalization payment than the trial judge ordered – $267,230.29.”