Divorce is a challenging journey, and one of the most critical aspects is the division of property.
In Ontario, the process is governed by specific laws and principles, primarily under the Family Law Act.
In this guide, JuriGo provides an overview of the legal considerations and processes involved in property division.
Here’s what happens to property when a marriage ends
For property division in a divorce, the main idea is to calculate the net family property for each spouse and then equalize it. This is the value of all the property that either spouse owns on the date of separation, minus the value of property owned on the date of marriage and other specific deductions, like debts.
| This means that the value of any property acquired during the marriage and still existing at separation must be shared equally , subject to some exceptions further explained below. |
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What are the exceptions?
While the law aims to ensure that both parties leave the marriage on relatively equal financial footing, it doesn't necessarily mean splitting everything 50/50 , but rather ensuring that each spouse ends up with an equal 'net' value.
For instance, if one spouse's net family property is significantly higher than the other's, the one with the lower value is entitled to half the difference between the two amounts. This is called equalization.
However, there are certain types of property that are excluded from this equalization process. For example, if you received a gift or inheritance during your marriage, this might not be included in the division, especially if you haven't used it towards the matrimonial home.
Similarly, if you got money from a personal injury settlement or certain insurance claims, these might also be excluded. It's also possible to set terms in a prenuptial agreement or a cohabitation agreement that can specify certain properties to be excluded from the division.
Nonetheless, if a spouse has been reckless with their spending or has hidden debts, the court can decide to divide things differently. The idea is to prevent unfairness, like one spouse being left with all the debt while the other walks away with a higher share of assets.
Additionally, if the cohabitation period was less than five years and the division seems disproportionately large, or if one spouse disproportionately supported the family financially, the court may adjust the division.
What happens to the matrimonial home?
In Ontario, the matrimonial home is given special consideration and its value is not divided as part of the equalization of net family property.
The Family Law Act emphasizes the equal right of both spouses to possess the matrimonial home, regardless of who holds the legal title.
This right continues until the home is sold, or until a court order is issued otherwise.
Because of this, a spouse cannot unilaterally sell, mortgage, or otherwise encumber the matrimonial home without the consent of the other spouse. This ensures that during the separation and divorce, both parties have a degree of stability and security, at least in terms of their residence.
In addition, a matrimonial home in Ontario is not limited to the primary residence but can include any real property that either or both spouses have an interest in and that is used as a family residence.
What about other joint responsibilities?
When a marriage ends, Ontario law envisions a fair and equitable division of responsibilities and assets. This encompasses not just the tangible assets but also the responsibilities towards children and debts.
A significant concern in a divorce is spousal support. The Family Law Act acknowledges that one spouse may have sacrificed their own financial independence or career progression for the sake of the marriage or children, thus entitling them to financial support.
| The determination of spousal support depends on several factors including the length of the marriage, the roles each spouse played during the marriage, and their current financial situations. |
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Another critical component of joint responsibilities in a divorce is child support.
The law puts the best interests of the child at the forefront. Both parents are expected to financially contribute to the upbringing of their children and the amount of support is usually determined based on guidelines that consider the income of the paying parent and the number of children.
For custody, the court considers various factors to decide what arrangement is in the best interest of the child. This includes the relationship between the child and each parent, the stability of each parent's home, and the child’s own preferences, depending on their age and maturity.
Joint debts are another crucial aspect. Generally, debts incurred during the marriage are the responsibility of both parties. However, the division can be complicated, and the court may look into who incurred the debt and for what purpose.
Time limits for making a property division claim
Under the Family Law Act in Ontario, a claim for an equalization payment must be made within six years from the date of separation or within two years from the date of divorce, whichever is sooner.
It's important to note that these time limits are strict and exceptions are rare. Failing to make a claim within these time frames can result in the loss of the right to an equalization payment. This underscores the importance of seeking legal advice promptly following a separation or divorce.
Other ways of dividing property
Couples can choose to divide their property in ways other than equalization, like through a separation agreement or a prenuptial agreement. Both are types of domestic contracts, but they serve different purposes and are entered into at different stages of a relationship.
Separation agreements are drafted at the end of a relationship and focus on resolving issues arising from the breakdown of the relationship. These agreements outline the terms of a couple's separation and typically address issues such as the division of property, spousal support, and child custody and support.
In contrast, prenuptial agreements, often referred to as marriage contracts in Ontario, are made before marriage. These agreements typically outline how a couple intends to deal with their affairs during the marriage and in the event of separation or divorce.
It's essential for individuals considering either type of agreement to seek independent legal advice. This ensures that they fully understand their rights and obligations, and it also helps in making the agreement more enforceable in court.
Is the property division process different for common-law couples?
In Ontario, the division of property for married couples and those in common-law relationships differs significantly. For instance, common law spouses don't have the same automatic rights to property division as married couples.
Instead, property division for common-law couples is primarily based on ownership. Each party generally retains whatever assets are in their name and there is no automatic right to an equalization of property.
Why seeking expert legal advice is important
Understanding these rules and exceptions is crucial because they can significantly impact the financial outcomes for both parties in a divorce.
It's often a complex process, and common mistakes include not considering all eligible property, misunderstanding the nature of excluded property, and missing important deadlines.
That's why it's usually a good idea to consult with a lawyer who can help navigate these complexities and ensure a fair and equitable division of property.
By filling out the form below, JuriGo will match you with a family law lawyer in your area to get the process started.
Our services are completely free and without any obligations!