Family Law
Property Division
Family Law
Property Division And Equalization In A Divorce
All the property acquired by the couple during their time of marriage is considered family assets or marital assets under Ontario and Canadian law. While this does not include the property owned by either spouse before marriage, any growth accumulated during the marriage will have to be split between the spouses. The rationale behind this rule is that all the wealth accumulated during the marriage must be split equally between the spouses. This might seem unfair to the spouse who contributed more financially or if there was a considerable disparity in their wealth to begin with. This makes it essential that you engage a divorce lawyer to ensure that only the marital assets are subject to division and equalization and that it is done in a fair manner.
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Property Division
As the name suggests, the process involves dividing the assets, debts, and financial obligations of the couple between them because of the divorce. This will involve segregating them into marital and excluded properties. All assets the couple acquired during the marriage will be considered marital property. Any gifts or inheritances one spouse acquired during this time will be considered excluded property, and they will not be subject to the property division. The matrimonial home is treated differently in the property division. Under the family law, both spouses have equal rights to it, even if it is registered in one spouse’s name.
Net Family Property
Net Family Property (NFP) refers to the total value of the assets and liabilities belonging to each spouse at the time of the separation, excluding the matrimonial home, the value of which is divided equally. Each spouse is expected to submit an accurate list of their assets and liabilities at the time of the separation and at the time of their marriage. After deducting the liabilities, the difference between their wealth at the time of separation and at the time of their marriage will give us the net family property of that spouse. This is the wealth created during the period of their marriage.
Equalization
Under Ontario and Canadian law, marriage is treated as an equal partnership between the spouses, regardless of the financial contributions of each spouse. Therefore, the law requires fair and equal division of marital property upon divorce. At the time of the divorce, the NFPs of the spouses will not be the same. This means that one spouse has accumulated more wealth than the other during the marriage. The spouse with the higher NFP will pay half of the difference amount to the other spouse. This is the equalization amount. Their NFPs are now equalized. In other words, the wealth generated during the period of their marriage is now divided equally between the couple. Again, it is worth mentioning here that the value of the matrimonial home will be divided equally between them regardless of its ownership.
How can a divorce lawyer help you?
In a contested divorce, it is essential that you have a divorce lawyer by your side from the very beginning. An experienced divorce lawyer can help you with the following:
- Drafting a marriage contract to protect your assets: It is always advisable to enter into a prenuptial agreement before the marriage to protect your assets and finances in the event of a divorce. Even after marriage, if you and your spouse can come to an understanding of these issues, you can enter into a postnuptial agreement outlining the division of assets and liabilities during separation or divorce. A divorce lawyer can draft the document and get it signed and witnessed, making it legally enforceable.
- Assist in identifying marital and separate assets: Your divorce lawyer will assist you in categorizing your marital and separate assets as per law.
- Identifying any hidden financial assets: Hiding assets and financial manipulation in divorce cases have become very common. Your divorce lawyer will ensure that your spouse submits all the financial statements and records for the sake of financial transparency.
- Negotiating the divorce settlement agreement: The couple can negotiate and come to a mutually agreeable understanding of how the assets, liabilities, and financial obligations are to be divided between them. Your divorce lawyer will facilitate these negotiations.
- Assisting in the property division and equalization: The calculation of property division and equalization amount to be paid to the other spouse might become complicated, especially when there are multiple properties involved. Your lawyer will help you with the process and ensure that it is legally compliant.
- Enforcing the agreement or court order: You may also seek the assistance of your divorce lawyer in ensuring that your former spouse sticks to the terms of the divorce settlement agreement or the court order. For example, if they fail to pay child support or spousal support, your family lawyer will take the necessary legal action through the Family Responsibility Office (FRO).
Frequently Asked Questions
Who will receive the possession of the matrimonial home in a divorce?
During marriage and separation, both spouses are legally entitled to stay in the matrimonial home. Once the divorce settlement agreement is signed or the divorce order is issued, one of the spouses will have to vacate the house as per the agreed terms and conditions. In most cases, the titleholder will have to pay the other spouse the equalization amount before they can take the whole possession of the home.
Will the funds in my separate personal bank account be considered marital property?
Yes. Just because you are using a separate personal bank account does not mean that those funds will be considered a separate asset during the divorce. However, if you have some funds in a joint account with a third party, ascertaining the nature of this asset will become complicated.
Will the debts and liabilities also be split evenly between the spouses?
In most cases, the debts and liabilities accumulated by the couple will be divided equally between the spouses. However, the family court might also look at the circumstances and decide to place more burden on one spouse. For example, if the debt was accumulated solely because of a spouse’s gambling habit, the court will rule that only that spouse is liable for this debt after the divorce.
We can Help
If you are going through a divorce and are worried about how your property will be divided, contact our divorce lawyers today for assistance. Our experienced family lawyers will fight for your rights and ensure that property division is done fairly, as per the law.
