Family Law Now After Hours
Hosted weekly by Associate Lawyer, Stephanie Brooks, and Articling Students, Joseph B. Cugini and Shanza Sohail.
Want to understand the nuances of dividing property and assets in Ontario divorce?
Your Comprehensive Guide
Divorce or separation in Ontario involves not only emotional but also complex legal and financial considerations, especially when it comes to dividing property and assets. Understanding how the division process works is essential for those considering, researching, or currently going through a divorce. In this comprehensive guide, we will provide you with valuable insights into the division of property and assets in Ontario, helping you make informed decisions during this challenging time.
1. Equalization of Net Family Property
Equalization of Net Family Property: In Ontario, the law aims to ensure fairness in property division. This process, known as equalization, involves calculating the difference between the spouses’ net family property at the date of separation. The spouse with a higher net family property may owe the other spouse an equalization payment to achieve a balanced division. This calculation considers the value of assets and debts owned by each spouse, both at the time of marriage and at the date of separation.
2. Matrimonial Home
Matrimonial Home: The family home holds special significance in divorce proceedings. It is often considered the matrimonial home and
comes with specific rules and considerations. The value of the matrimonial home is included in the equalization calculation, but there are exceptions and rules regarding its division. For example, one spouse may have the right to remain in the home temporarily, particularly if there are children involved.
3. Exclusions and Deductions
Exclusions and Deductions: Not all assets are subject to division. Some may be excluded, and certain deductions may apply. Common exclusions include gifts or inheritances received by one spouse, provided they were not used for the family, and assets excluded by a valid marriage contract or separation agreement. Deductions may apply for debts or liabilities solely in one spouse’s name.
4. Valuation of Assets
Valuation of Assets: Property, businesses, and pensions must be accurately valued for division purposes. The method of valuation can vary depending on the type of asset. Real estate may require appraisals, while businesses may need a forensic accountant’s assessment. Pension plans typically require a calculation of the pension’s present value.
5. Complex Assets
Complex Assets: Dealing with stocks, investments, and international properties can add complexity to the property division process. Stocks and investments are typically valued based on their market value at the date of separation. International properties may require specialized valuation methods and consideration of foreign legal requirements.
6. Debts and Liabilities
Debts and Liabilities: Just as assets are divided, debts and liabilities must also be shared between separating spouses. Marital debts, such as mortgages, credit card debts, and loans, are subject to division. Understanding how these financial obligations are allocated is essential.
7. Date of Separation
Date of Separation: The date of separation plays a significant role in determining asset value and division. It marks the point at which financial separation begins, impacting the calculation of net family property. It’s crucial to establish this date accurately, as it affects various aspects of property division and support obligations.
8. Property Division Agreements
Property Division Agreements: Drafting and enforcing separation agreements is a vital part of the property division process. These agreements outline how assets and debts will be divided and should be carefully crafted to protect your interests. Consult with a family lawyer to ensure your agreement complies with legal requirements.
9. Dispute Resolution Options
Dispute Resolution Options: Property disputes can be contentious. Exploring dispute resolution options like mediation and arbitration can help resolve disagreements without the need for lengthy court battles. These alternative methods can save time and money while allowing both parties to have a say in the outcome.
10. Post-Divorce Adjustments
Post-Divorce Adjustments: Asset values may change after separation or divorce. Understanding how to address these changes, such as reassessing equalization payments or property division, is essential for long-term financial stability. If significant changes occur, consult with a lawyer to explore your options for adjustments.
Navigating the division of property and assets during a divorce or separation in Ontario is a complex process. Understanding equalization, the treatment of the matrimonial home, exclusions, deductions, and the valuation of assets is crucial for a fair settlement. Remember that you don’t have to face this challenging journey alone; there are legal professionals and resources available to help you navigate property and asset division, protect your financial future, and ensure a fair resolution for all parties involved. With the right knowledge and support, you can navigate the complexities of property division with confidence.
