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Covid-19 and Divorce: Why the Date of Separation Matters

Let’s face it.  The COVID-19 crisis is going to have an impact on our lives long after we have all come out of self-isolation.   However, for spouses considering separation, the crisis is about to change what you know (or you think you know) about going through a divorce. –especially the sharing of property in your divorce settlement.

The Date of Separation Matters

In Ontario, property is not “divided” between spouses unless it is actually jointly owned.  Instead, each spouse is required to “equalize” the value of their net family property (assets minus debts) accumulated during the marriage.  This valuation occurs at the “separation date”.  As there are typically only gradual changes in the value of a person’s assets to be shared, it usually matters little if a separation date is a month earlier or later.

However, for the average Canadian, the property settlement or “equalization payment” will be a lot lower on April 1, 2020 than if they had separated on month earlier.    This is because most Canadians will have seen a significant drop in their net worth as a result of:  loss of employment, increased spending and debt, drop in stock market and business values, as well as a drop in real estate prices as a result of the COVID-19 crisis.   Thus, choosing a date of separation can have an enormous financial impact on your divorce, depending if you separated before or after that date.

Navigating the Date of Separation

Deciding what the  spouse’s “date of separation” is a complicated legal and factual question.   It requires looking at many factors, including the personal, social, sexual and financial relationship – as well as any written notice given.  

For those of us who have been practicing family law long enough to remember the real estate meltdowns of the mid-1990’s and the stock crash of 2008,  we can anticipate that the rapid and dramatic economic change brought about by the current crisis will result in parties looking to take advantage either by:

  1. trying to “trigger” a separation during the crisis; or,
  2. trying to artificially “back date” a separation to a time when the assets were worth more.

Now more than ever, timely and experienced legal advice is critical for spouses who may be faced with separation.   For more information or free consultation, contact us at info@matrimonialhome.com

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