Colin and Cevey married in 1999 and divorced in 2008. Less than eight years after paying what was at the time the largest divorce settlement known to Britain (£25million), Collins has now reconciled with his former spouse and they are reported to have been cohabiting now for approximately six months.
Collins and Cevey's record-breaking divorce and recent reconciliation raises questions of how the couple should treat their finances going forward and what will happen if they remarry. Having experienced the turmoil that separation and divorce can bring into one's life, individuals considering post-divorce reconciliation (and anyone entering into a second or subsequent marriage) may understandably worry about how to best protect their assets and other interests in the event of future breakdown of the relationship.
As for any soon-to-be spouses, reconciling couples should take precautions to protect the assets they bring into the relationship. In Ontario, the Family Law Act (FLA) provides that married couples are entitled to share equally in all wealth accumulated by the couple during the relationship. On separation, each spouse is entitled to exactly half of the value of the parties' combined net family property. This means that the person with the higher net family property must pay the other person half of the difference between their net family property values. This payment is referred to as an equalization payment.
Put simply, a spouse's net family property is the difference between the value of his or her net worth (assets less debts and other liabilities) on the date of marriage and the value as of the date of separation. However, there are special rules pertaining to the matrimonial home, the definition of which includes any property or properties that ordinarily occupied by the spouses as their family residence, and there are other exceptions with respect to net family property and equalization payments.
Because the calculation of net family property essentially allows parties to get credit for property brought into the relationship, it is a good idea to obtain and keep documentation of the value of any assets owned on the date of marriage. This will make it much easier to receive the credit for the value of assets brought into the marriage in the event of separation.
It is important to keep in mind, however, that a complication arises with respect to any pre-marital property that becomes a matrimonial home and remains a matrimonial home as of the date of separation. This is because the FLA provides that the deduction from net family property, which ordinarily applies to other pre-marital assets, does not apply to the matrimonial home. The rules pertaining to matrimonial homes can result in a devastating reduction in one's date-of-marriage deduction from net family property and the result is that the value of the matrimonial home must be split equally even if one spouse brought the entire asset into the marriage. As such, anyone considering reconciling with a former spouse, like Phil Collins, (or anyone considering marriage or remarriage), should think twice before allowing a home owned prior to the marriage to become a matrimonial home. It would also be wise to consider entering into a marriage contract prior to the date of marriage.