Who Gets the Car When You Divorce?
Vehicle values, ownership and division are important pieces of property and can become highly contested when going through a separation. Cars, especially collector cars, can be a source of pride for many owners. But what does the law say?
In Ontario, property division and vehicles are determined by ownership of the car. Ownership will determine possession. If you bought the car before marriage on your own then you will be allowed to deduct the value of the car as a date of marriage deduction.
Similarly if you can trace the purchase of the car to excluded funds (such as an inheritance or personal injury award) then the value of the car may be excluded from the sharing process (or equalization). Another factor could be if the car was “gifted” to you by a third party then it may then be characterized as an excluded asset.
However, if you bought jointly with your spouse during the marriage then the ownership of the car becomes more complex. Because marriage is an equal partnership in the eyes of the law, the starting presumption for property division is an equal split of all assets (and debts) acquired during the marriage.
When one spouse has a larger share of family property (resulting from ownership/property investment) then adjustment would be required in the form of equalization payment. This is essentially a payment that the wealthier spouse makes to the other to put both parties on equal footing for this new chapter in their lives.
Let’s look at a couple scenarios:
1) Dad owns a 1967 Ford Mustang that be bought before marriage
If you brought a 1967 Ford Mustang into the marriage then the ownership of this asset would be excluded. If for some reason you no longer want the car, you can either give it to your spouse or sell it.
The best way to ensure that both parties get the outcome they want with respect to the cars, they should consider entering into a separation agreement outlining how they would like to divide their property. You can learn more about separation agreements: here.
2) Couple jointly buys a Tesla Model X during the marriage
Vehicles that are jointly purchased during the marriage have joint ownership. The value of the vehicle will go on both parties financial disclosure and will make little difference to the equalization of net family properties.
However, the parties will have to come to an agreement as to who will use the car. The most common method to determine this is to give the car to the party who needs it the most either for commuting or childcare purposes. In this case, the value of the vehicle will go towards the receiving parties financials and the equalization of the net family properties will shift.
If the parties cannot come to an agreement as to who should get the vehicle or as to the value of the car, then a Court could consider several options. These include having the car appraised by a certified car appraiser, consider what the replacement insurance value is, or research what similar vehicles for sell for on Auto Trader or the “black book” to arrive at a value, or the court could order the sale of the vehicle with the proceeds of the sale to be divided equally or in proportion to who paid for it.
