Family Law
5 minutes reading time

Understanding Property Division Laws in Ontario

Written by
The Tabuchi Law Team
Published on
March 24, 2023

Property division is one of Ontario's most essential aspects of separation or divorce. It can be a complex and emotional process, but it is crucial to understand your rights and options to make informed decisions.

What is property division?

Property division is the process of dividing the assets and debts of a couple when their relationship ends. This includes the marital home, vehicles, savings, investments, and pensions.

Who is entitled to property division?

Only married couples are entitled to property division in Ontario. Common-law couples do not have automatic property division rights, but they may be able to negotiate a settlement agreement or go to court to seek a property division.

What is the goal of property division?

Property division aims to achieve a fair and equitable division of the couple's assets and debts. This means that each spouse should receive a share of the property proportional to their contributions to the relationship.

How is property divided in Ontario?

The Family Law Act governs property division in Ontario. The Act sets out several factors that the court must consider when dividing property, including:

  • The length of the relationship
  • The age and health of the spouses
  • The income and earning capacity of the spouses
  • The contributions of each spouse to the relationship, both financial and non-financial
  • The needs of any dependent children

Equalization

In most cases, property division will involve equalization. Equalization is a process of dividing the net family property (NFP) equally between the spouses. The NFP is calculated by subtracting all debts from all assets.

Example:

Husband and wife have been married for 10 years. During the marriage, they acquired the following assets and debts:

- Matrimonial home $500,000

- Savings $100,000

- Investments $50,000

- Mortgage $250,000

- Credit card debt $10,000

The total value of the assets is $650,000, and the total value of the debts is $260,000. The NFP is therefore $390,000.

If the spouses have equal net family properties, they will each receive half of the NFP, or $195,000. However, if one spouse has a greater NFP than the other, the spouse with the greater NFP will have to pay the spouse with the lesser NFP half of the difference.

Example:

In the above example, let's say that the husband had a net family property of $400,000, and the wife had a net family property of $300,000. The husband would have to pay the wife half the difference, or $50,000.

Exceptions to equalization

There are a few exceptions to equalization. For example, the court may not order equalization if one spouse has committed fraud or if one spouse has inherited property or received a gift during the marriage.

Other factors considered by the court

In addition to equalization, the court may also consider other factors when dividing property, such as:

  • The needs of any dependent children
  • The contributions of each spouse to the marital home
  • The standard of living that the spouses enjoyed during the marriage
  • The length of time that has passed since the spouses separated

Conclusion

Property division can be a complex process, but it is crucial to understand your rights and options to make informed decisions. If you are separating or divorcing, it is a good idea to speak with a lawyer to get advice on your specific situation.

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