When it comes to separations and divorces, there is a big misconception on how property is divided amongst spouses in Ontario. The prevailing belief is that property is split equally, 50% of the total value to be given to each individual. This is not necessarily the case.

Divorces and separations fall under the Family Law Act and the Divorce Act and the law recognizes the equal contribution of each individual. The payment that may need to be made to one of the spouses for the sharing of the property value is called an equalization payment. To break down how equalization of property works, you need to take a look back at each individual’s net worth at the time of marriage and their net worth at the time of separation. The calculation of property is based on the dollar amount increase in net worth for each spouse. If the net worth of the spouses did not increase by the same amount (which is the case in most separations), the individual who had the larger increase will need to pay their former partner an equalization payment to balance out their net worth increase. This can be done by either paying the other party for the difference or giving them increased or sole ownership of shared property. For example; if spouse A had $10,000 worth of property prior to marriage and has $20,000 worth of property at the time of separation, they had an increase of $10,000. Spouse B had property valued at $5,000 prior to marriage, and $10,000 at time of separation, giving them a $5,000 increase in property. Spouse A had a $5,000 greater increase in their net worth, meaning that they have to pay an equalization payment of $2,500 to spouse B, giving them both an equal increase in their net worth of $7,500.

The family home, if owned is in many cases the highest valued asset held by a married couple. It is considered a special family space, and this is why it is an exception to the equalization rule. Both individuals have equal right to the matrimonial home, even if one of the spouses owned the home prior to the marriage. Considering both parties have equal rights to the family home, an agreement between both individuals must be made on who has exclusive possession of the home. If an agreement cannot be made you can use a mediator or have a judge decide in court. If there are children, the parent who has custody of the children will most often be granted the right to the home, as it helps the children adjust to their new family dynamic.

All of the above applies only to married couples in Ontario or Canada. Please understand that if you were not married you do not have any of the above entitlements as married people do. The court may still compensate you for your contribution to the relationship but this is not a straightforward matter. To be exact, the property division rules and laws are very complicated and there is no way to explain them fully in a blog unfortunately. The above just gave you a little taste of how it may work. If you’re facing this issue as a result of your separation we strongly recommend that you come in for a consultation so that this issue can be explained to you fully in a comprehensive manner that will possibly put your mind at ease.

At AGS Law we offer comprehensive family law services in Barrie and South Eastern Ontario. If you are currently going through a separation or divorce and have questions about the division of property, give us a call today 705-735-0003 and let us help you.