Have you ever wondered what happens to your property when you separate from your spouse and how it might be divided? This is a question faced by many individuals who are in the process of separating and obtaining a divorce.
In Ontario, when married spouses separate they are required to equally share all property gained during the marriage. Ideally, the only property would be a bank account, easily divided among the parties with one withdrawal. However, in most circumstances, the property accumulated over the span of the marriage is more complicated, including items such as a house, a mortgage, cars, RRSPs, bank accounts, and credit cards. When the property cannot be easily split, it is likely one spouse will end up with more assets or a property of a higher value than the other spouse. In the event one spouse retains more assets than the other spouse, they will be required to pay the other spouse to equalize the amount of property between the both spouses. This payment is called an equalization payment.
To determine whether one spouse owes the other an equalization payment, both spouses add up the total value of their assets on the date of separation and subtract the amount of their debts. Then, both spouses add up the total value of their assets (minus their debts) on the date of marriage and deduct this from the value of their assets on the date of separation. The result is each spouse’s net family property. Whichever spouse ends up with a higher net family property value, will be required to make an equalization payment to the other spouse to ensure both are walking away with an equal value of the family property.
It sounds simple enough. However, depending on the property, there will be additional deductions and exemptions to be accounted for in the calculation. It is always best to speak to a family law lawyer about the division of your property and how to properly calculate your net family property. Our lawyers at Hart Legal have helped many clients with property division issues and are ready to assist. Contact us today to set up a consultation.