Q. My spouse and I have each calculated our net family property. What do we do now?

A. In Ontario, the Family Law Act  requires the person with the higher net family property to pay his or her spouse an "equalization payment." The equalization payment is half of the difference in value between the two spouses' net family properties. In other words, the equalization payment is the amount necessary to ensure that both parties leave the marriage with the assets equally divided. Once you’ve both done your calculations, you and your spouse need to negotiate how the payment owed by one of you will be paid to the other. Will it be done via a transfer of some asset, or in a lump sum, or with ongoing payments until the entire amount is paid? If you can not agree on how to equalize your property, you may have to apply to a court and ask a judge to make the decision for you.

Q. What happens with the matrimonial home in calculating net family property?

A. The value of the matrimonial home is always divided equally, even if it was owned by only one of the spouses on the date of the marriage.

Q. My spouse just told me that our marriage is over. The house is in his/her name alone. Do I have to move out of my home?

A. Regardless of whose name in on the title to the family home, in Ontario, both spouses have an equal right to remain in the matrimonial home even after they have separated. Under the Family Law Act, ownership and possession are different. Even if you are not on title to the matrimonial home, you have as much right to remain in it as your spouse. Eventually, either through negotiations or by court order, a decision will be reached regarding which of you, if either, will remain in the home. It is possible that neither of you may be able to afford to stay in the matrimonial home and that it may have to be sold.

                                                                                                                                                         
Q.  Both I and my spouse have been to see a lawyer and we have both received information and advice about how our family property should be divided. We have managed to come to our own agreement about how we want to divide our property. Can our separation agreement divide things differently from the way the law dictates?

A. Yes. You are free to divide your property any way you want in your separation agreement. You can write the agreement yourself or jointly retain a lawyer to draft it.  You should make sure, however, that each of you each have your own lawyer look over the separation agreement and explain it to you before you sign it. Once you’ve signed it, you will need your former spouse’s agreement or a court order to make any changes.

Q. Our net family property calculations show that I am entitled to an equalization payment from my spouse in the amount of $25,000. How do I get this payment? Do I have to wait for it?

A. Normally you would receive the payment in cash. However, you can also receive your equalization payment by your spouse transferring assets or property worth $25,000 to you.  Alternatively, you may agree to allow your spouse to pay off the equalization payment they owe you by giving you a series of periodic amounts until the entire amount is paid off. Exactly how payments will be made is one of the things you can arrange in your separation agreement. If you can’t agree, you’ll have to have a court make the decision for you.

Q. I am entitled to an equalization payment from my spouse. Am I going to have to pay tax on the money I receive?

A. No, you will not because it is already your property. All that equalization is, is a re-shuffling of assets between spouses. Any monies you receive are not considered income.

Q. I've heard people talk about "excluded property". I don't understand what that means.

A. Certain items received during your marriage, such as life insurance proceeds, gifts from third parties, inheritances and damages arising from personal injury awards, may be excluded from the calculation of your net family property. In order for you to be able to exclude these items from the calculation you must have kept these items separate from all other family property, and you must be able to prove how these monies have been used. For example if you received a $50,000 inheritance and then invested it in a GIC, the value of the GIC would not be included in the calculation of your net family property, but you would have to show how the inheritance was transferred and invested.

There is one important exception to this rule, and that is any money that you might invest in the matrimonial home. The value of your matrimonial home must be included in the calculation of your net family property, even if you used money from an inheritance, life insurance proceeds, or damages arising from a personal injury award to pay towards the home.

Q. It is my wife’s fault that our marriage is over. She has a relationship with another man and has decided that she no longer wants to be married. Why should I have to share my property with her now when this new man can benefit from it?

A. Canada has “no fault” divorce laws. This means that a spouse’s behaviour has no bearing on how divorce related issues are decided, other than those related to the children. You spouse's new relationship has no effect on the division of property at the end of your marriage. The Family Law Act sees a marriage as an equal partnership. When it is over, the financial benefits of the partnership have to be divided evenly and fairly. The calculations are made without looking at who is at fault or who is to blame.

Q. I have decided that my marriage is over and have moved out. However, I am now concerned that my spouse will remove or sell the family possessions located in the house before I have a chance to negotiate an agreement. I think that my spouse might get rid of it just to spite me. Is there anything you can do?

A. Yes. You can apply to the court and ask for an order to stop your spouse from selling or giving away the property. The court may order them not to sell or dispose of the property or it can order that it be put in someone else’s care to protect it until such time as all your issues are resolved.

Q. I received a cottage as a gift from my grandmother. I never lived in it with my husband and saved the rental income from it in a separate bank account which I have in my name alone. I know that the law says that if I separate, I don’t have to share the value of gifts I received during your marriage. I have decided to sell the cottage. Once I sell the cottage, is the money I get for it part of the assets I must share with my spouse if we decide to separate?

A.  Not necessarily. If you keep the money from the sale of the cottage separate, for example, in a separate bank account held in your name only, on in an investment like a GIC, and you do not blend the GIC monies with family money, so that you can always trace it to the sale of the cottage it will be excluded from the property you must share at the end of your marriage.    
You should be aware that here is an important exception to this rule that affects the matrimonial home. If you use the money from the sale of the cottage to pay down the mortgage on your matrimonial home or to renovate it, or use it for any other purpose related to the family, you must share the full value of the family home with your spouse if you separate. Once money from the sale of your cottage is put into the matrimonial home, or blended with other funds, it must be shared, even if the money came from a gift or an inheritance or other property the law says you otherwise would not have to share with your spouse.

Q. My parents left me their house when they died. I have been living in it for the last four years with my girlfriend. We are planning to get married and raise a family here. I don’t want to lose the house to her in the event that our marriage ends. Can we draft a marriage contract which states that that the house will remain mine no matter what happens?

A.  Yes. Your marriage contract can state that you own the house and what its value was when you married. You can also state that any increase in the value of your house during your marriage will be yours alone. You should be aware, however, that your wife will have the same right as you have to stay in the matrimonial home if your marriage breaks down. You cannot put anything in your marriage contract to change this rule. If your marriage ends, your wife will be able to stay in the house until you can agree to, or the court decides on, other arrangements.

Q. My husband has been paying into his company pension plans for 35 years. I never finished university, stayed home to look after the children and never had a career. Now I have a part time job in a dress shop to earn a little extra money. If we separate, do I have a right to share your husband’s pension?

A. Yes. Your husband will have to hire a professional actuary to look at his pension plan and establish its value. This amount will be added to your husband’s share of the family property. Alternatively, you and your husband can agree that when he starts receiving his pension, you will get a certain percentage of it. You should definitely consult a lawyer to make sure that the net family property and equalization calculations are done properly.
It is important that you remember that as soon as you separate, you are no longer recognized as a spouse under pension law. For example, if your husband dies after you separate, but before you reach any agreement, you may not have a right to his pension’s survivor’s benefit. You should therefore make sure that your separation agreement or court order is very clear about your rights to his pension.

Q. A few years ago my brothers and I built a second story addition to the house I live in with my wife. The addition cost $100,000 and added $250,000 to the value of the house. Now my wife and I are splitting up. Can I get the $250,000 back?

A. No. You have to share the full value of your family home with your wife. It doesn’t matter if you put more money or work into your home. There are very few exceptions to this rule.

Please note that this information about property division is general in nature and not intended to be a substitute for legal advice. If you are concerned about the division of property following the breakdown your marriage or common law relationship, please contact a lawyer. You can get free information about how to select and retain a lawyer by getting a copy of the FREE REPORT offered on the top right-hand section of  this page. Do not sign a separation agreement without independent legal advice.