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Property Division – What you need to Know

Common Challenges in Divorce & Separation

If you are getting a divorce and property division is an issue, it will be important for you to speak to an experienced lawyer. The laws regarding property division are different in each jurisdiction. Make sure that you talk to an experienced and knowledgeable lawyer in Etobicoke who can provide you with individualized legal advice. Here are some key points to keep in mind to help you understand property division claims in Ontario. 

1. Only married and formerly married individuals have rights to property division. 

Under Ontario law, common-law couples do not have the same rights as married couples. Property division in Ontario is governed by Part 1 and Part 2 of the Family Law Act (FLA). Only married couples, including same-sex couples, are entitled to apply for property relief. This includes rights to an equalization payment under Part 1 or rights to the matrimonial home such as exclusive possession under Part 2. This does not mean that common-law couples do not have property rights as of right. Rather, they are required to apply for legal remedies through different legal mechanisms such as a joint family venture or a constructive trust claim. The law of unjust enrichment is typically the way that property disputes are resolved between unmarried domestic partners.

2. If you are bringing a claim for property division, you must apply to the right court. 

Only the Superior Court of Justice or the Unified Family Court has jurisdiction to deal with property issues such as equalization or rights to a matrimonial home. The Ontario Court of Justice does not have jurisdiction to hear property claims. The Ontario Court of Justice only has jurisdiction to hear claims regarding decision-making, child support, and parenting time. 

3. A spouse is not entitled to half of the other spouse’s property. 

Many people mistakenly believe that you are entitled to half of the value of any asset that belongs to your spouse. This is not true. A spouse is entitled to half of the difference between each spouse’s net family worth as of the date of separation. A calculation is done to determine the increase in the net worth of each spouse from the date of marriage to the date of separation by adding up the value of all assets owned on the date of separation and deducting the value of all debts and liabilities. The increase in net worth of each spouse is referred to as the net family property. The spouse with the higher net family property pays the spouse with the lower net family property half of the difference between them. This is referred to as the equalization payment.

To calculate the equalization payment, each spouse calculates his or her net worth on the date of marriage and on the date of separation. The date of separation is also known as the date of valuation. First, you determine your valuation date value of property by totalling all of your assets as of the date of valuation. Assets include property interests such as bank accounts, vehicles, household items such as furniture, valuables such as jewelry, electronics, and collectibles, as well as life insurance policies, and interests in a trust, business, RRSPs, and pensions. 

Some property interests are easy and straightforward to value such as bank accounts. Other interests can be more difficult or expensive to value such as a business or real estate. For these types of interests, you will likely need to obtain the professional services of an expert such as a forensic accountant or a real estate appraiser. Once you have totalled all of your assets owned on the valuation date, you subtract all debts and liabilities existing as of the date of valuation. You also subtract the value of all excluded property. 

You then subtract your marriage date value from your valuation date value. You calculate your marriage date value in the exact same way you calculated your valuation date value (the value of all of your assets minus your debts and liabilities as of the date of the marriage). 

The calculation gets a little tricky when it comes to the matrimonial home. If you are the spouse who owned the matrimonial home on the date of marriage, you are not entitled to subtract any mortgage from your marriage date property. The matrimonial home gets special treatment in family law. This brings us to our next point.

4. if you bring the matrimonial home into the marriage you cannot deduct its marriage date value.

The matrimonial receives special treatment in the net family property calculation. If one spouse purchased the matrimonial home prior to the date of marriage, he or she is not entitled to deduct the marriage date value of the home from their valuation date value to lower their net family property. What this means is that the entire value of the home is equalized between the spouses with no credit given to the spouse who brought the home into the marriage. 

5. A court may order an unequal division of family property in certain cases. 

The courts may order an unequal division of net family property in circumstances in which it would be unconscionable to equalize the net family properties. It is important to note that this threshold is very high. There must be more than just unfairness, it must shock the conscience of the court. The scenarios in which the court will order a variation from the normal operation of equalization are listed in Section 5(6) of the Family Law Act. They include the following: 

  • A failure to disclose debts existing on the date of marriage to the other spouse
  • A spouse recklessly incurring debts for the purpose of lowering his or her net family property
  • Where a spouse’s net family property consists primarily of gifts made by the other spouse
  • a spouse’s intentional or reckless depletion of his or her net family property
  • where a spouse would acquire an equalization payment that is disproportionately large for a period of cohabitation that is less than five years  
  • where a spouse has incurred a disproportionately larger amount of debts or liabilities than the other spouse for the support of the family 
  • a written agreement between the spouses that is not a domestic contract
  • circumstances related to the acquisition, disposition, preservation, maintenance or improvement of property

6. There is a statute of limitations for bringing a claim for property division. 

A claim for equalization cannot be brought after the earliest of six years after separation, two years after a divorce is granted, or six months after the first spouse’s death. Make sure you bring a claim for equalization in a timely manner or you may be statute-barred.

Etobicoke Lawyer that can help with Property division 

A lawyer can play a crucial role in helping you with issues that may arise from property claims. Property issues in family law can be very complex. There are many rules regarding certain types of assets that may have implications for the final outcome of your case. There are also procedural issues that a lawyer can help you with such as completing a net family property statement properly and addressing non-disclosure. If you suspect that a party is not disclosing all assets, a lawyer can help you address this issue through legal means to compel this disclosure. In essence, having a lawyer in a family law case can provide you with legal expertise, support, and representation to navigate the complexities of the legal process and achieve a fair outcome. 

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