Lorne Fine Professional Corporation—Family Law Lawyers in Toronto

Frequently Asked Questions about Property Division in Ontario

Q: How does the division of property between spouses work?

A: The Family Law Act provides for a division of “Net Family Properties” of the parties/spouses as of the date of separation. It is not simply a 50/50 division of all of the party’s property as of the date of separation; it can be a very difficult calculation. Sometimes it is necessary to retain the opinion of experts to determine the value of an asset as of the date of marriage or the date of separation (e.g., business valuations, pension, etc.). A pension can be a very valuable asset. Although a spouse may not have access to a pension (which they obtained through their employer) as of the date of separation, it must still be valued for the purposes of determining a division of net family property and included in the calculation. Furthermore, some parties do not realize the full extent of his/her spouse’s assets. Some assets may be hidden or the parties may not realize that they have an asset that must be shared with his/her spouse. An effective family law lawyer in Toronto should be able to assist you with these issues.

An individual’s “Net Family Property” is defined as:

the value of all of the property, except excluded property, that a spouse owns on the valuation date (i.e., the date of separation), after deducting the spouse’s debts and liabilities and the value of property, other than the Matrimonial Home, that the spouse owned on the date of marriage, after deducting the spouse’s debts and other liabilities, calculated as of the date of marriage.

Therefore, a party must essentially determine the increase in value of his/her net worth (assets less all liabilities) from the date of marriage to the date of separation. The determination of the date of separation (defined as when there was “no reasonable prospect of reconciliation” between the spouses) is, therefore, critical when determining net worth. It will be a question of fact. Sometimes parties can differ greatly as to the date of separation. If the value of a spouse’s assets increased or decreased significantly between the Wife’s date of separation and the Husband’s date of separation, the determination of the division of properties between the spouses can be difficult.

Once each party determines his/her “Net Family Property”, one party usually pays the other party an “Equalization Payment.” An “Equalization of Net Family Properties” is defined in the Family Law Act as “the spouse whose net family property is the lesser of the two net family properties is entitled to one-half of the difference between them.” Therefore, if a Husband’s “Net Family Property” (i.e., Assets –less- Liabilities –less- net worth as of the date of marriage) is determined to be $100,000.00 and the “Net Family Property” of a Wife is determined to be $0, the Husband would owe the Wife an “Equalization Payment” of $50,000.00 in order to divide their respective “Net Family Properties”.

Q: I inherited money during my marriage. Do I have to share my inheritance with my former spouse?

A: In determining a party’s “Net Family Property” not all property is treated equally. Property that is not included in your “Net Family Property” is called “Excluded Property.” This property is not shared with your spouse. “Excluded Property” includes, but is not limited to, the following:

Gifts
Inheritances
Income from any gift or inheritance
Damages or a right to damages for personal injury

Although you may receive a Matrimonial Home by way of a gift or inheritance, a Matrimonial Home cannot be considered “Excluded Property.” A Matrimonial Home is considered to be special property under the Family Law Act. Furthermore, if you obtained excluded property during the marriage, you must be able to trace the excluded property to an asset existing on the date of separation. If a major gift or inheritance was paid into the Matrimonial Home or mixed with joint assets owed by you and your spouse during the marriage, you cannot claim exclusion. You should consult with a divorce lawyer to determine if you have “Excluded Property” that you do not have to share with your spouse.

Q: What is a “Matrimonial Home” as defined by the Family Law Act?

A: A “Matrimonial Home” is treated very differently from other assets under the Family Law Act. A “Matrimonial Home” is defined as:

Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home.

A “Matrimonial Home” cannot be considered “Excluded Property.” Therefore, if you inherited a “Matrimonial Home”, or received the house by way of a “gift” from a third party, the value of the house as of the date of separation must be shared with your former spouse. Furthermore, if you owned a house on the date of marriage and you and your spouse lived in the same house on the date of separation, unlike other property owned on the date of marriage, you cannot deduct the value of the house from your “Net Family Property” as of the date of marriage

Q: How can I protect my property that I am bringing into a marriage?

A: It is possible to enter into a “Marriage Contract” with your new spouse that specifically contracts out of some of the provisions of the Family Law Act. The “Marriage Contract” would set out how a division of Net Family Properties would be calculated in the event of a breakdown of the marriage. You can specifically exclude property that would not be considered part of your Net Family Property in the event of a breakdown in your marriage (i.e., pensions, RRSPs, savings, etc.). Since a “Matrimonial Home” is considered special property under the Family Law Act (see above) if you are bringing a house into a relationship, it would be prudent to enter into a “Marriage Contract.” An experienced family law lawyer can assist you in properly executing a “Marriage Contract” in order to attempt to ensure that the Contract is enforceable in the event of a separation from your spouse. It is not wise to draft your own “Marriage Contract.”

Contact a Family Law Lawyer in Toronto

At Lorne Fine Professional Corporation, we excel at helping families through difficult circumstances. We have the experience to know when to negotiate and when to litigate in order to protect your best interests. If you’d like to settle your divorce collaboratively, we are also certified in collaborative family law and can help you attain an agreeable settlement with your spouse. We offer free initial phone consultations and provide all of our clients with customized legal services that meet their particular needs.

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