When a marriage or common law relationship in Ontario comes to an end, understanding how to divide property can be a daunting task. At Divorce is Simple, we’re here to help simplify the process and guide you through this complex time. Whether you're ending a marriage or a common law relationship, knowing your rights and obligations can make all the difference.
Dividing Property When a Marriage Ends
In Ontario, the law requires that property acquired during a marriage must be split equally when the marriage ends. This encompasses a wide range of assets such as your home, car, business, furniture, pension, and even cash savings. However, for property owned prior to marriage, only the increase in its value during the marriage is typically divided equally. Interestingly, the family home is treated uniquely and must be fully shared, regardless of who originally owned it or how it was acquired, unless otherwise agreed.
The financial adjustment made to equalize the division of property is known as an equalization payment. It’s important to note that if you need a court to decide on the amount of this payment, you have a limited window to act—six years from separation or two years from finalizing your divorce, whichever comes first.
Exceptions to Equal Property Division
There are certain exceptions where assets may be excluded from equal division. This includes property (other than the family home) inherited or received as a gift from someone other than your spouse, compensation received from an insurance policy due to a death, or money from a personal injury claim. Couples can also agree to exclude certain properties through a formal agreement. However, remember, the family home is generally not considered excluded property, even if it was a gift or inheritance.
What You Might Owe or Be Owed
Calculating what you or your spouse might owe each other involves a few key steps:
Calculate the Value of Property: Begin by assessing the value of your properties and deducting any debts as of the separation date.
Determine Pre-Marriage Assets and Debts: Subtract the value of property and debts from the date of marriage. The family home is excluded from this calculation.
Calculate the Difference: The difference will help you identify your share of the net family property. If this calculation results in a negative value, it is considered zero.
Determine Equalization Payment: Compare your share with your spouse’s share, subtract the smaller from the larger, and divide by two. This is the equalization payment, if applicable.
Common Law Couples and Property Division
For common law couples, the landscape is different. There is no automatic division of property acquired during the relationship. Each partner retains ownership of items they purchased. However, if you contributed to property owned by your partner, you might be entitled to a share of it, potentially requiring court intervention if disputes arise. Common law partners may benefit from a cohabitation or separation agreement to clearly define property rights.
Get Legal Advice
Navigating property division can be complex and having professional guidance is invaluable. We recommend consulting with a lawyer to understand your rights and ensure that your interests are protected. Additionally, having a separation agreement reviewed by a legal expert can prevent future disputes and ensure clarity for both parties.
At Divorce is Simple, our goal is to ease the transition through mediation and informed decision-making. We can help you draw up a legally binding separation agreement. Reach out to us to learn more about how we can support you through this process, whether online across Ontario or in-person at our Burlington location.
Contact Divorce is Simple today for expert guidance. For more information or to book a consultation, visit our website today.
Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. For specific legal guidance, please consult a qualified family lawyer. This is not intended to be used as advice.
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