Family Property
DIVISION OF FAMILY PROPERTY IN ONTARIO
In Ontario, the Family Law Act, lays the groundwork for division of your property upon separation or divorce.
In Ontario the law treats married couples and common-law couples very differently when it comes to dividing up family property. Spouse is defined in the Family Law Act as two persons who are married to each other or have entered into a marriage that is voidable or void. If you are not married, although you may have cohabited for quite some time, you will not be treated the same in law as a married couple for the purposes of division of property.
If married, property division is controlled by section 5 of the Family Law Act. That section states:
When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.
This sounds quite confusing but it is a straight-forward mathematical calculation. It means that the husband fills out a form called a Financial Statement that lists all of his assets (everything in solely his name and ½ the value of those assets held jointly with the wife) and all of his debt (all debt solely in his name and ½ the value of the joint debt with the wife). The husband then deducts the total of his debt from the total of his assets to arrive at a value called the “net family property”. The wife will also fill out a financial statement with her respective information and calculates her net family property in the same fashion.
Whichever spouse has a higher net family property must pay one-half of the difference of the net family properties to the other spouse. This is called an equalization payment.
ie. Husband: Assets ($100,000), Debts ($40,000) = Net Family Property of $60,000
Wife: Assets ($80,000), Debts ($10,000) = Net Family Property of $70,000
In this circumstance the wife would owe the husband (70,000-60,000)/2=$5000.
This $5000 is the equalization payment.
You need a family lawyer to help you understand which assets are considered assets for the purposes of net family property. In addition, a family lawyer will help you to understand which debts are to be included in your net family property. There are exceptions to what you must include as assets and debts. A family lawyer can help you understand the exceptions. Payments of equalization payments can be made in different ways and a family lawyer can help you work out options for the equalization payment.
Individuals who are not spouses pursuant to the Family Law Act definition are not required to make equalization payment calculations in the same fashion and may, in fact, not be responsible for equalization payments of any sort. If you are not married you may still be entitled to a payment of some sort in accordance with the common law.
You should consult with a family lawyer to ensure that any payments made you your spouse, whether legally married or common-law, are fair and reasonable for you.
Family Law Services is a great resource to find the family lawyer you need…and your first half-hour consultation is free.