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Understanding Ontario property division rules at divorce

Ontario couples who are seeking a divorce may be interested in information about how property is divided at the end of a marriage. While marital property is split evenly, other property may be subject to a statutory payment formula.

The property division process that happens when a married couple divorces is governed by the Ontario Family Law Act. This law says that when a couple is legally married and not simply living common law, most property acquired during the marriage is shared between the divorcing couple, with some exceptions. The property that they owned before the marriage is kept separate and not divided. However, any increase in the value of that property is lumped in with the value of the couple’s marital property.

This is resolved through an “equalization payment.” Each spouse calculates their net family property (NFP), which is the difference between the value of their property on the date of marriage and the value on the date of separation. The spouse with the higher NFP must then pay half of the difference of the two spouse’s NFPs. When the couple has a matrimonial home together, which is a home that they both live in up to the time of separation, the value of the home at the time of marriage is not used to calculate the owner spouse’s NFP. Effectively, this adds the full value of the home to their NFP, rather than just the increase in value.

When a party wishes to make an equalization payment claim or file for an extension of time, a lawyer may be able to help. The lawyer may also be helpful in negotiating a property division settlement agreement that is fair for both parties in lieu of the statutory method above.

Source:¬†Community Legal Education Ontario, “Separation and Divorce or Death of a Spouse: Property Division,” Sept. 7, 2014

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