In Ontario, the Family Law Act governs the division of property upon the breakdown of a marriage. The term “division of property’” is actually a bit of a misnomer. In actual fact, when a marriage ends, spouses are entitled to an “equalization of net family property”. The court does not award a “division of property” in specie, as much as it orders one spouse to make a money payment to the other spouse. The payment that may be owed to one of the spouses in order to effect this sharing of property values on the breakdown of a marriage is called an equalization payment, or an equalization of net family property.
In simple terms, the Family Law Act requires the value of any kind of property that was acquired by a spouse during the marriage and still exists at the date of separation to be divided equally between the spouses. In essence, the legislation treats the marriage as a partnership as spouses accumulate wealth during the course of their relationship. However, it is important to note that it is not the property that is divided but the value of property. Spouses receive a “date of marriage” deduction for certain property they bring into the marriage, but are required to share the increase in the value of property owned by a spouse at the date of marriage.
It is also important to note that there may be possible exceptions to these rules. The Family Law Act recognizes a category of property referred to as “excluded property”, which category may include gifts or inheritances received during the marriage from someone other than a spouse, provided that the gifts or inheritances were not used towards a matrimonial home.
Keep in mind, as well, that the property sharing provisions of the Ontario Family Law Act only apply to married spouses. If you are in a common law relationship, you are not entitled to an equalization payment. However, you may be able to make a claim against your spouse owing to a direct or indirect contribution you might have made to property that he or she owns. These claims are referred to as trust claims.
The determination of your rights and obligations to the “division of property” on the breakdown of a marriage or common law relationship can be very complex. At Ambrosino Law Group, we have the expertise and experience to help you understand your rights and obligations and the ability to guide you through a successful resolution of such disputes.