In Canada, a marriage contract may be one of the best protections for you if both spouses are comfortable with this type of agreement. Photo by ridvan_celik/Getty Images

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Q. I’m a Canadian citizen and I would like to get married soon. I have heard that if I divorce at any time then 50 per cent of my wealth will be divided with my spouse. What can I do to protect my assets? For instance, if I kept my assets outside Canada, if a divorce were to happen, can my wife then claim for a 50 per cent division of those assets? —Worried and confused, Ali

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FP Answers: Divorce does not automatically result in losing half of everything, Ali. The rules surrounding the division of property between spouses vary between provinces. For example, in Ontario, matrimonial homes are generally considered to be divided equally between spouses in the event of divorce. In Alberta, a 50/50 division is not automatic due to differences in the legislation governing family property.

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The matrimonial home is often one of the most significant assets that is subject to division, but keep in mind that changes in family net worth involving other assets is also an important factor. Generally, rather than looking at changes in specific assets, the change in net worth (assets minus liabilities) during the marriage is considered when determining each spouse’s share.

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Canadian citizenship does not impact which rules will apply, Ali, nor does the location of an asset. Having an asset outside of Canada does not protect it. Foreign assets must be disclosed in Canadian family law proceedings. In fact, attempting to hide or transfer assets could create legal and financial issues.

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Foreign assets may also require disclosure to the Canada Revenue Agency (CRA) for tax purposes annually. Canada taxes worldwide income for its residents and requires disclosure of certain foreign property with a cost base over $100,000 annually on tax filings. Holding assets outside of Canada may therefore add complexity and costs to your financial life and tax situation, as these assets can be more challenging to report.

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In Canada, a marriage contract may be one of the best protections for you if both spouses are comfortable with this type of agreement. Also called a prenuptial agreement, a contract like this can dictate how assets should be divided should the relationship end. They are not ironclad by any means, but they can provide some certainty, Ali. Spouses would need to agree to full financial disclosure prior to marriage while obtaining independent legal advice. These agreements should be prepared carefully and well in advance of the wedding day to ensure fairness and avoid undue pressure on either spouse.