Assets and Property Division

The Family Law Act of Ontario governs the property rights of married spouses. The philosophy of the Family Law Act is that, subject to certain exceptions, any financial growth during the marriage is to be shared equally by both spouses.

Accordingly, upon separation or death, a calculation is done separately for each spouse to determine the growth in the value of that spouse’s assets during the marriage (called “net family property”) and a payment is then made by one party to the other (called “an equalization payment”).

Under the Family Law Act, there is no actual sharing of property and each party is entitled to retain whatever property they own, subject to the requirement that one spouse may have to buy out the other.

In order to do the calculation, each party prepares a statement of his or her assets and debts at the date of marriage and at the date of separation or death. The value of the net assets at the date of marriage is deducted.

While these examples are very general, they provide a sense of how the scheme works.

A. Both your assets and your spouse’s assets increase in value:

Your Assets Your Spouse’s Assets
At date of marriage (a) $ 400,000 $ 300,000
At date of separation (b) $ 800,000 $ 1,000,000
Net Family Property (b – a) $ 400,000 $ 700,000
Difference $ 300,000  
Payment to you $ 150,000

B. Your assets increase in value, your spouse’s assets decrease in value:

Your Assets Your Spouse’s Assets
At date of marriage (a) $ 400,000 $ 300,000
At date of separation (b) $ 800,000 $ 200,000
Net Family Property (b – a) $ 400,000 Nil
Difference $ 400,000  
Payment to you $ 200,000

C. Your assets stay the same; your spouse’s assets decrease in value:

Your Assets Your Spouse’s Assets
At date of marriage (a) $ 300,000 $ 300,000
At date of separation (b) $ 300,000 $ 200,000
Net Family Property (b – a) Nil Nil
Difference Nil  
No payment to either party  

A marriage contract may impact your entitlements. Jacqueline will need to review a contract as soon as possible to determine its effect.

Exceptions relate primarily to matrimonial homes, inheritances, and gifts. A matrimonial home is a home in which you are both residing at the date of separation or death. It is usually impossible to know at the start of a marriage whether a particular home will be a matrimonial home or not, since separation or death is unpredictable and therefore, it will be unknown where you will be residing at that time.

If you are living in the same home at the date of marriage as at the date of separation or death, the value of the home at the date of marriage cannot be deducted from the value of the net assets at the date of separation or death. So, in effect, the entire net value of the home is shared equally between the spouses.

Any gift or inheritance received by a spouse after the date of marriage is not to be included in that spouse’s net family property. Any growth from the gift or inheritance will also not be included. However, any income derived from the gift or inheritance will be included in the calculation unless the donor of the gift expressly states otherwise.

If the gift or inheritance is used to purchase a matrimonial home or to increase the equity in such a home, it loses its protection due to becoming part of the home’s net value.