In Ontario, marriage is seen as an equal partnership. Any financial benefits accrued during the marriage are intended to be shared equally, should the spouses separate. To achieve this result, each spouse is required to calculate their Net Family Property (NFP) upon separation. This is done by subtracting the value of their assets, less any debts owed on the date of separation, from the value of their assets, less any debts owed on the date of marriage. The spouse’s respective NFP figures are then compared and the spouse with the greater NFP must pay the other spouse half the difference. This payment is known as an equalization payment. To help calculate your NFP, you must complete a "Financial Statement". There are special rules that apply to the matrimonial home and gifted or inherited property. A simple step by step example of how to calculate NFP and determine the equalization payment is set out below.
The property division rules described above, and as outlined in the Ontario Family Law Act, do not apply to common-law spouses. Common law spouses in Ontario do not have an automatic right to a division of property. However, they may be entitled to a payment from a spouse for their direct or indirect contribution to property. There is no exact formula to determine the amount of this payment and as a result it is often more difficult to resolve property issues for common law spouses.
Spouses can choose to change property division rules, from what the law provides, by entering into a Cohabitation Agreement or a Marriage Contract. These agreements can be tailored by spouses to meet their specific needs.
There are time limits with respect to seeking a division of property and it is important you speak to a family law lawyer to ensure that you do not allow these prescribed time limits to pass.
|Step 1: Calculate the value of all assets on the date of separation||$200,000.00|
|Step 2: Calculate the value of all debts on the date of separation||$50,000.00|
|Step 3: Subtract the value of all assets on the date of separation from the value of all debts on the date of separation||___________
|Step 4: Calculate the value of all assets on the date of marriage||$40,000.00|
|Step 5: Calculate the value of all debts on the date of marriage||$20,000.00|
|Step 6: Subtract the value of all assets on the date of marriage from the value of all debts on the date of marriage||___________
|Step 7: Calculate the Net Family Property by subtracting the subtotal in step 3 from the subtotal in step 6||$130,000.00|
|Step 1: Set out the net family property of the first spouse (see above for steps to calculate)||$130,000.00|
|Step 2: Set out the net family property of the second spouse (see above for steps to calculate)||$40,000.00|
|Step 3: Calculate the difference between the two net family property values||___________
|Step 4: Divide by half the value calculated in step 3. This is the equalization payment||$45,000.00
(in this example, this is the amount that the first spouse would pay to the second)
**Please note that special rules may apply to some items, including the matrimonial home and inherited and gifted property