Asset division

Asset Division

When couples decide to split up, it’s not always so cut-and-dried. If you own assets together like a home it can be complicated. When you say your vows, you’re not just making a commitment spiritually, you’re also making a commitment financially. Any property you accumulate after you tie the knot could be fair game when you split up.

 

Net Family Property

When a marriage comes to an end in Ontario, the financial contributions of each partner made during the marriage is acknowledged. The law says that “the value of any kind of property that was acquired by a spouse during the marriage and still exists at separation must be divided equally between the spouses.”  That’s not all, the law also says, “any increase in the value of property owned by a spouse at the date of marriage must be shared.”

In a perfect world each spouse would own an equal share of property. Unfortunately, we don’t live in a perfect world – more often than not, the property will need to be divided. When one spouse owns more property than the other or property is owned jointly, an equalization payment must be made; this is called the equalization of net family property.

The Family Law Act defines the Net Family Property as:

“net family property” means the value of all the property, except property described in subsection (2), that a spouse owns on the valuation date, after deducting,

(a) the spouse’s debts and other liabilities, and

(b) the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage, after deducting the spouse’s debts and other liabilities, other than debts or liabilities related directly to the acquisition or significant improvement of a matrimonial home, calculated as of the date of the marriage; (“biens familiaux nets”)

The valuation date is often the date the divorce is granted, but not always. The Family Law Act defines the Valuation Date as:

“valuation date” means the earliest of the following dates:

  1. The date the spouses separate and there is no reasonable prospect that they will resume cohabitation.
  2. The date a divorce is granted.
  3. The date the marriage is declared a nullity.
  4. The date one of the spouses commences an application based on subsection 5 (3) (improvident depletion) that is subsequently granted.
  5. The date before the date on which one of the spouses dies leaving the other spouse surviving. (“date d’évaluation”) R.S.O. 1990, c. F.3, s. 4 (1); 2006, c. 19, Sched. C, s. 1 (2); 2009, c. 11, s. 22 (1-4); 2009, c. 33, Sched. 2, s. 34 (1).

 

What is Considered Property?

Your understanding of property and the legal definition of property could be very different.  The Family Law Act defines Property as:

“property” means any interest, present or future, vested or contingent, in real or personal property and includes,

(a) property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself,

(b) property disposed of by a spouse but over which the spouse has, alone or in conjunction with another person, a power to revoke the disposition or a power to consume or dispose of the property, and

(c) in the case of a spouse’s rights under a pension plan, the imputed value, for family law purposes, of the spouse’s interest in the plan, as determined in accordance with section 10.1, for the period beginning with the date of the marriage and ending on the valuation date; (“bien”)

Common examples of property include real estate, cars, bank accounts, RRSPs, stocks, bonds and pensions.

 

Statement of Property

Not all property is necessarily included in the net family property. It’s important to determine which property is excluded. This is accomplished by filing a Statement of Property with the courts. The Family Law Act defines the Statement of Property as:

Statement of property

8. In an application under section 7, each party shall serve on the other and file with the court, in the manner and form prescribed by the rules of the court, a statement verified by oath or statutory declaration disclosing particulars of,

(a) the party’s property and debts and other liabilities,

(i) as of the date of the marriage,

(ii) as of the valuation date, and

(iii) as of the date of the statement;

(b) the deductions that the party claims under the definition of “net family property”;

(c) the exclusions that the party claims under subsection 4 (2); and

(d) all property that the party disposed of during the two years immediately preceding the making of the statement, or during the marriage, whichever period is shorter. R.S.O. 1990, c. F.3, s. 8; 2009, c. 11, s. 24.

 

Resources:

Division of Property – Ministry of the Attorney General

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