Division of Property After Divorce
Family property includes everything you own, your spouse owns or you own jointly on the date of separation. There is a presumption that family property is to be shared although it is not always shared equally and is subject to certain exclusions. Exclusions can include inheritances, the value of the property you owned on the date of marriage and gifts. It is important your Toronto divorce lawyer understands the complex property division to help you navigate equalization. Family property includes things like bank accounts, investments, art, jewellery, property, insurance policies, pensions and business interests.What is the property division for married couples?
Following the breakdown of a marriage, dividing property is an important step in the separation process. This is known as “equalization”.
The matrimonial home receives special consideration during the division of property process. Both spouses have the right of possession of the matrimonial home, regardless of ownership prior to the marriage or the names on title. Additionally, the spouses cannot limit the other spouse’s possession rights to the matrimonial home through a pre-nuptial agreement. The matrimonial home cannot be sold without the express consent of the other spouse, even where that spouse no longer resides in the home.
If you both agree, you and your spouse can divide your house any way you want, however, each spouse may be entitled to share the proceeds equitably.
What is the property division for common-law couples?
Unlike married couples, common-law couples are not entitled to the same property rights. The provisions in Ontario’s Family Law Act that govern the division of property apply only to married couples, not to common-law couples.
Each partner in a common-law relationship is therefore entitled only to whatever he or she brought into the relationship or acquired during it. The family home is treated like any other asset, and belongs to the person who purchased it, or to both partners if they purchased it together. There can be a financial claim made if one person made a contribution towards the house, even if they are not on title.
In other circumstances, a cohabitation agreement might layout how property is to be divided upon separation.
How does family property equalization work in Toronto?
All property acquired by either spouse (whether together or separately) during the marriage is referred to as family property and subject to “equalization”. A couple who is separating is required to share the growth in value of their assets accrued during the marriage. This is done by accounting for the difference in the value of a couple’s assets at the time of marriage, versus the date of separation (also known as the “valuation date”). It is important to note, in reference to property owned at the date of marriage, only the increase in value during the marriage is equalized, except for the matrimonial home. Family property can include but is not limited to: your cottage, business, vehicles, pension, RRSP’s, investments, etc.
Equalization is calculated by first determining the value of each spouse’s value of property, known as “net family property”. Net family property is the total amount of each spouse’s assets, minus debts, and liabilities. Once the amounts for each spouse are calculated, the spouse with the smaller net family property is required to make an equalization payment to the other party.
The Matrimonial home in the Toronto division of family property
For many couples, the matrimonial home is a significant asset and decisions need to be made about what to do with the family home after separation. This is the property where the spouses lived at the time of their separation and often a place of great personal significance.
What is included in a net family property calculation
Equalization is calculated using the net family property calculation. The net family property (NFP) is the amount of each spouse’s assets minus that person’s debts and liabilities.
The Family Law Act of Ontario uses a formula to calculate the payment one spouse needs to pay the other to equalize net property. The equalization formula is as follows:
- First, determine the value of each spouse’s assets on the date of separation.
- Then, subtract all debts from the total assets on the date of separation.
- Next, determine the value of all assets that each person brought into the marriage.
- Then, subtract any gifts from third parties, inheritances or proceeds from a personal injury claim received during the marriage which were kept separate.
- Lastly, subtract the date of marriage assets from the date of separation assets.
The resulting amount is your Net Family Property (NFP). The lower NFP will be subtracted from the higher one, and the difference will be divided in half. This is the equalization payment.
Why do you need a Toronto Property Division Lawyer?
Many people may believe property division is as simple as splitting all assets 50/50, however, this is not true. Dividing property is not only an important step in the divorce and separation process but also one that can be extremely stressful. Under Ontario law, wealth and assets accumulated during the course of the relationship must be divided between the parties in an equitable way. Therefore, having professionals who are able to tackle complex financial structures and disentangle your accumulated assets in a cost-effective and timely manner is important.