In Ontario’s Family Law Act, “improvident depletion” refers to the intentional or reckless reduction of net family assets by one spouse prior to separation, to the detriment of the other spouse’s interest in the division of property. “VALUATION
date,” the date of separation, is a critical point in time for determining inappropriate profligate behavior.

The following are some of the behaviors that may constitute improper squandering of property:

  • Gambling or Excessive Spending: If one spouse indulges in gambling or engages in unreasonably lavish spending that results in a significant reduction in the family’s assets, this may be considered an undue splurge.
  • Hiding or Transferring Assets: Transferring assets to another person’s name or otherwise hiding assets to avoid division in the event of a divorce is also improper squandering.
  • Intentionally Undervaluing Assets: Selling assets for significantly less than their market value, thereby reducing net family assets, may constitute an improper squander.
  • Unnecessary Debt: Unnecessarily accumulating large amounts of debt prior to separation, such as buying expensive gifts or making risky investments for the person with whom you are having an affair, may also be viewed as inappropriate spending.

It is important to note that not all behaviors that result in a reduction of net family property constitute improper squandering.

For example, the loss of a normal business investment or necessary expenses for the family would not normally be considered a misappropriation.
For example, if one party suddenly sells jointly owned stock at a low price on the eve of separation and uses the proceeds for personal enjoyment without a reasonable explanation, this is likely to be found to be an improper squandering of property.

How do you deal with improperly squandered property?

If a spouse is suspected of improperly squandering property, the aggrieved party can petition the court for:

  • The squandered property is added back to the net family property and then divided.
  • Adjustment of the percentage of division of property to compensate the injured party.

Example: If the court finds that a spouse has misspent $20,000 of family property, the court may add the $20,000 back to the net family property and divide it equally, or it may simply award the misspender a $20,000 reduction in his or her share of the property.
Burden of Proof: The injured party has the burden of proving that his or her spouse has misappropriated property. This requires the provision of relevant evidence, such as bank records, transaction records, witness statements, etc.
Importance of seeking legal advice: Misappropriation of property is a complex legal issue that requires specialized legal expertise. If you suspect that your spouse is squandering property, it is highly recommended that you consult an experienced family lawyer to protect your rights.

JZW Law has a team of experienced high net worth divorce lawyers. Fluent in both Chinese and English, we are committed to providing professional legal services to high net worth individuals in Toronto. We specialize in handling complex issues related to property division, business ownership, trusts, overseas assets and more. We offer a free initial consultation and welcome you to contact us for more information or to schedule a consultation.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. If you need legal help, please consult a professional lawyer.