The end of a relationship can be extremely difficult and stressful because not all marriages end amicably. Many marriages end contentiously. This can make getting divorced emotionally draining as your marriage ends and you are forced to figure out how you and your former partner are supposed to divide assets.
If you are getting divorced in Ontario and own property with your spouse but are not sure what you can expect when it comes time to determine how your property and assets will be divided this guide is for you.
It is important to note that if you have specific questions related to your specific situation you should consult a divorce lawyer and maybe even consider consulting a real estate lawyer who handles divorce sales.
In most cases, the law says that married couples have to share the value of their property if they separate or divorce. This means that the partner who has more property usually pays money to the partner who has less property. Usually, the property itself is not physically divided.
To share the value of your property at the end of your relationship, you have to first list and value all of your assets and debts.
This helps you calculate your net family property (NFP). NFP is how much money a married partner is worth at the end of the relationship after taking into account what they brought into the marriage.
To calculate your NFP, you add together all assets and subtract all debts that you had at the end of your relationship. This is usually on the day you and your partner separated. Then you also subtract all assets less all debts you had on the day you married.
Some assets or debts are treated differently in this calculation. For example, some gifts and inheritances are not included. There are also special rules about your matrimonial home.
Your partner also calculates their NFP. You then use your NFP and your partner’s NFP to figure out who has to pay the other partner and how much. The money one married partner pays the other partner when they separate is called an equalization payment.
In Ontario, property acquired during a marriage must be split equally when a marriage ends for any reason. This can include your:
- home
- car
- business
- furniture
- pension
- money
For property that you owned before the marriage, any increase in value is usually divided equally. This applies to the family home where you lived with your spouse.
You must share the full value of the family home, even if:
- one of you owned the home before you got married
- you received it as a gift
- inherited it
To effect this sharing, money owed to either spouse is called an equalization payment, or an equalization of net family property.
Exceptions
There are some exceptions that allow one spouse to keep property they own. This is called excluded property.
Examples of excluded property include:
- property (other than the family home) that you inherited or were gifted from someone other than your spouse during your marriage
- money you received from an insurance company because someone died
- money you received or have a right to as a result of a personal injury, like a car accident
- property that you and your spouse have agreed to exclude through an agreement
If the family home was gifted or received as an inheritance, it does not count as excluded property. It must be divided equally unless you and your spouse agree to a different split.
If the family home is on a large piece of property that is also used for other purposes, only the house and the small area around it are considered the family home. For example, if your family home is on a dairy farm, the whole farm would generally not be considered the family home.
The court can only divide property differently in very special situations and if a 50-50 (equal) split would be extremely unfair to one of you. Talk to a lawyer for more advice.
The division of property and debts in a marriage, marital like relationship, or domestic partnership can be simple and straightforward in some cases, and in other cases can be difficult and complex. Regardless of your type of case, we are sure to protect your interests in property acquired during the relationship, prior to the relationship, and by gift or inheritance. The goal is to maintain your interests while achieving a fair and equitable distribution.
You can talk to a lawyer who can help you figure out what your equalization payment is.
Time limits
If you need to go to court for a decision on the amount of an equalization payment, you have six years from the day you separated, or two years from the day your divorce is final (whichever comes first) to do so.
Common law couples
Common law couples are not legally required to split property acquired when they lived together. The rules are different for couples who are or were living in a common-law relationship than for couples who are or were legally married, when it comes to dividing property, who is allowed to stay in the family home or make decisions about selling the family home, who is entitled to receive the benefits from the sale of the family home, and dividing property in your spouse’s will.
With these issues being in legally recognized marriage versus being in a common-law relationship will make a difference with your rights to the property. For example, a married couple automatically shares the value of a property if they separate or if one spouse dies. This is not the case for common-law couples.
Furniture, household items and other property belong to the person who bought them. Common law couples do not have the right to split an increase in value of the property they brought with them to the relationship.
If you contributed to property your spouse owns, you may have a right to part of it. Unless your spouse agrees to pay you back, you may have to go to court to get back your contribution.
Although there is no requirement to divide property on separation, common law spouses may choose to enter into a domestic contract such as a cohabitation agreement or separation agreement that sets out their respective rights to property.