Property Division
Married or common law, property is a big deal in a separation
In Ontario, the division of property during divorce is governed by the Family Law Act, which emphasizes the equalization of net family property (NFP) rather than a direct split of assets - for married people. This means that instead of dividing each asset, the focus is on balancing the increase in each spouse's net worth during the marriage. The spouse with the higher NFP typically compensates the other to ensure fairness. This approach applies exclusively to legally married couples; common-law partners are subject to different rules. If you are not married but lived in a common law relationship, the rules are different and you should discuss this with a lawyer.
To determine NFP, both spouses must disclose all assets and debts as of the date of marriage and the date of separation.
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Your lawyer will look at Valuation Date Assets: Total assets minus debts on the separation date; Marriage Date Deductions: Subtracting the net value of assets owned at the time of marriage; Exclusions such as assets like gifts, inheritances, or personal injury settlements received during the marriage may be excluded, provided they haven't been co-mingled with joint assets.
The difference between each spouse's NFP is then calculated, and the spouse with the higher NFP pays half of this difference to the other, ensuring an equitable distribution.
The "matrimonial home" holds a unique position in Ontario's property division law.
Regardless of who owns it or whether it was acquired before the marriage, its full value is included in the NFP calculation, and no deductions are made for its pre-marriage value. This can significantly impact the equalization payment.
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There are also scenarios where the standard equalization might be deemed shockingly unjust, such as:
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One spouse incurring debts recklessly.
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A marriage lasting less than five years resulting in a disproportionate payment.
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One spouse depleting assets to avoid equalization.
In such cases, courts have the discretion to change the equalization payment to achieve a fair outcome.
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If you have specific concerns or need personalized advice on property division during divorce, consider consulting with us.