Property Division & Divorce in Ontario: An Overview

Whether you are engaged to be married or filing for divorce, you may seek advice about property division and divorce in Ontario. Most couples have a very general idea of what happens to property when they marry or separate. However, dividing assets between spouses might appear simpler than it actually is.

What is Property?

In a marriage, property is anything of value that belongs to the parties involved. It includes land, money in bank accounts, shares, stocks, bonds, mortgages, vehicles, AR and even jewelry. Basically, if it has significant value, it is considered by the court to be property that can be divided.

There is, however, property that is excluded from division.

Excluded property includes:

• Inheritances gained from a third party during marriage
• Gifts
• Property protected by prenuptial agreements

How is Property Divided Between Spouses?

It is important to note that the division of assets only takes place once a couple is permanently separated. To declare a separation as permanent, a judge considers whether or not the couple:

• Still engages in sexual intercourse
• Lives together
• Friends and family know about the separation and other factors

When you are declared legally separated, division can begin.

To understand the process of asset division, there are several elements to keep in mind. These include:

• Date of marriage (DOM) and date of separation (DOS)
• Net Family Property
• Equalization payment
• Excluded property

Calculating the Value of Your Property

One of the initial steps towards dividing property is determining individual net property. Each spouse has to consider and calculate the value of the assets they own from the date of marriage to the date of separation. After the asset value is determined, spouses can then deduct debts owed to arrive at what they have to share.

In other words:

• Calculate the overall value of any land, bank accounts, shares and anything of value you have at the date of separation
• Deduct from this value any debt you have that was accumulated from date of marriage to date of separation
• Deduct the value of any inheritances, gifts and other excluded property you acquired during the marriage
• Deduct the value of property you owned on the date of marriage before your wedding
• Deduct the total value of debts you had on the date of marriage before your wedding
• The final amount is called the Net Family Property
• This valuing process is only available to married couples and not individuals in common law relationships

Net Family Property and Equalization Payments

Once you know the value of each of your property, it becomes possible to divide it equally. Whichever spouse has the highest net family property (NFP) is obligated by Family Law Act to pay the other an equalizing amount.

If a husband, for instance, has an NFP of $100 000 and the wife has one of $50 000, the husband takes $50 000 from his value, splits it in half, gives his wife and keeps his share. As a result, both spouses will have $75 000 each. This payment is called the equalization payment. As the name suggests, the parties should walk away with an equal amount of property value.

However, this method is not set in stone. It is possible for spouses to incur uneven division if one spouse was involved in harmful transactions, fraud and other special circumstances.

Benefits of a Prenuptial Agreement and Marriage Contract

The above-mentioned procedures are what are required by the Family Law Act. However, you can modify rights to property according to your needs. Get a Toronto divorce lawyer to take you through property division and family law procedures in Toronto, Ontario, as well as draft a prenuptial agreement that both of you will be happy with.