How is property divided after a marriage in Ontario?

December 1st, 2011 by

In Ontario, married couples share in the wealth accumulated during the marriage. Common-law couples usually do not. This does not mean that married couples own all their assets jointly or have any other form of interest in each other’s property. Married spouses are entitled to a payment that “equalizes” the growth in the spouses wealth during the marriage.

At the end of a marriage, married spouses in Ontario are entitled to a payment that makes each spouse’s growth in net worth during the marriage the same. There are some exceptions which will be briefly discussed below. This is a right to receive a payment, similar to the right to receive a payment under a contract. This right does not give either spouse any form of ownership interest in the other’s property. At its simplest, the parties add up the value of all their assets on the date of separation, and deduct the value of all of their debts. From that figure, each spouse also deducts his or her net worth on the date of marriage (net worth being total assets minus totals debts and other liabilities.) That calculation results is a number called a spouse’s “net family property.” The spouse with the larger net family property has to make a payment to the other spouse to makes the two net family properties equal.

There are some important adjustments to the calculation of each spouse’s net family property. First, gifts and inheritances from third parties during the marriage are not included in a spouse’s net family property unless a gift or inheritance has been co-mingled with the other spouse. Second, spouses can exclude the value of specific assets from the net family property calculation by using a marriage contract. Third, the whole value of all matrimonial homes owned on the date of separation are included in the spouse’s net family property. A spouse does not get to deduct the value of a matrimonial home owned on the date of marriage if that property is still a matrimonial home on the date of separation. Fourth, the payment of a personal injury claim for pain and suffering is not included in the net family property calculation. However, the portion of a payment for personal injury relating to loss of future income may be included in net family property. Also, while spouses share any increases in their net worth during the marriage, they do not share in any decline in net worth during the marriage.
Judges cannot order that property change hands to equalize the spouse’s net family property. They can only order a payment of money. Such an order for payment is enforced in the same way as any other order for payment of money and can be significantly affected by a bankruptcy by one or both spouses. Spouses can agree to transfer property to each other in fulfillment of family law claims. That can be a significant incentive to settle matters outside of court.

The property claims arising from the breakdown of a marriage can be worth a lot of money. There are nuances to the law that can affect the size of the payment that is made. Family lawyers can ensure that a spouse’s rights are protected. If the spouses are resolving financial issues at mediation, it is important that they choose a mediator who understands the law well in order to obtain a fair result.

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