Divorce: Division of Property
One of the main things that causes a lot of frustration during a divorce is the; ‘who gets what’ question. For some couples the division of property can get very messy while for others they are able to deal with it quickly and easily. Under Canada’s constitution each province and territory is responsible for laws regarding the division and or equalization of family or marital property, and these laws can vary from one province or territory to the next. This article will consider a basic understanding of property division in a divorce in Canada giving a general overview of Ontario regarding the division of property.
It is important to realise that in the eyes of the law a marriage is an equal partnership. Therefore, whether a spouse is responsible for running the household or earning an income for the family, their contribution to the relationship is equally important. When a marriage ends, the partnership is over and property has to be divided. As a result the general rule for the division of property is: “the value of any property that you acquired during your marriage and that you still have when you separate, must be divided equally between spouses. Property that was brought into your marriage is yours to keep, but any increases in the value of this property during the duration of the marriage must be shared.” This rule is applied to most family assets with the exception of some including the matrimonial home.
Because the marriage is viewed as a partnership, the critical dates in this partnership are the date of marriage, which constitutes the entry into the partnership, and the ‘valuation date’, which can be viewed as the date when one or both partners decide to dissolve the marriage or partnership. The valuation date, for example, is the date when the parties separate or divorce. When the partnership is dissolved each partner is entitled to one half of the value of the accrued property and not one half of the property itself. In respect of the province of Ontario the relevant statute for property division is the Family Law Act. This Act brings out the concept of ‘net family property’ and the ‘equalization payment’.
These concepts introduced in the Family Law Act require each spouse to draw a balance sheet of assets or property as at the valuation date. These assets are totalled to give a value. From this value the spouse’s debts and liabilities are subtracted. Thereafter, the value of the property that a spouse brought into the marriage is then deducted from this value (it must be noted that the matrimonial home is to be excluded. The resultant sum is a spouse’s net family property.
Once both spouses net family property is determined, the difference between the net family properties of each spouse is then calculated; and the spouse with the higher net family property pays to the spouse with the lower net family property one half of the difference. This payment is referred to as the equalization payment.
For assistance in your divorce seek out a Toronto divorce lawyer.