Depleting Assets and Unequal Division of Net Family Property

As recently reported by TMZ, Hunter Biden, son of former Vice-President
Joe Biden, is currently involved in a bitter property dispute with his
former partner Kathleen. The couple separated in October, 2015, but Kathleen
has only recently moved to file for divorce, among other relief. According
to Kathleen, Hunter has spent a significant amount of money paying for
his own lifestyle interests which have drastically reduced the family
funds, such as spending money on drugs and alcohol, attending strip clubs,
and purchasing gifts for women with whom he had extramarital relationships.
Kathleen is seeking
spousal support, among other claims. Given Kathleen’s comments regarding Hunter’s
spending, it’s possible that she may be making a claim for an unequal
division of net family property.

In Ontario, the law regarding the unequal division of net family properties
is governed by the
Family Law Act which provides at section 5(6) that the Court may award a spouse an amount
that is more or less than half the difference between the net family properties
if the court is of the opinion that equalizing the net family properties
would be unconscionable, having regard to:

1. a spouse’s failure to disclose to the other spouse debts or other liabilities
   existing at the date of the marriage;
2. the fact that debts or other liabilities claimed in reduction of a spouse’s
   net family property were incurred recklessly or in bad faith;
3. the part of a spouse’s net family property that consists of gifts made
   by the other spouse;
4. a spouse’s intentional or reckless depletion of his or her net family property;
5. the fact that the amount a spouse would otherwise receive under subsection
   (1), (2) or (3) is disproportionately large in relation to a period of
   cohabitation that is less than five years;
6. the fact that one spouse has incurred a disproportionately larger amount
   of debts or other liabilities than the other spouse for the support of
   the family;
7. a written agreement between the spouses that is not a domestic contract; or
8. any other circumstance relating to the acquisition, disposition, preservation,
   maintenance or improvement of property.

An important consideration in the case of Kathleen and Hunter is when Hunter
began to deplete his assets. In Ontario, net family properties are equalized
at the date of separation, meaning any equalization owed by Hunter to
Kathleen (or vice versa) would be calculated at that date. If Hunter depleted
the assets prior to separation, the claim for unequal division of net
family properties may benefit Kathleen, and allow her to obtain a judgment
for more than her equalized share of the assets remaining. In determining
whether or not Hunter intentionally or recklessly depleted his net family
property, the Court would look to the nature of Hunter’s expenses,
and the degree to which his assets were depleted as a result.

However, if Hunter began depleting his assets after the date of separation,
Kathleen may have an issue collecting any equalization payment owed to
her. In such cases, it may be necessary for the non-depleting party to
obtain a court order freezing the assets of the depleting party, pending
the final resolution of the matter.