BAKER & BAKER

         Family Lawyers

During your thirty minute complimentary consultation you will receive a free copy of the Ontario Divorce Handbook by Donald S. Baker, LL.B.

 

We ensure that all your questions are answered.

Baker & Baker

1176 Yonge Street

2nd Floor

Toronto, Ontario

M4W 2L9

dbaker@bakerandbakerlaw.com

 

Property Division 

 

With in-depth experience in determining property division, clients in Ontario trust us with supplying useful advice during divorce that reflects a genuine insight of their requirements. 

Upon separation each spouse is entitled to an equalization of their net family property. This is a division of the value of the property, not the property itself. 

 

 

 

                                   

In Ontario, upon separation each spouse is required to subtract the value of their debts from their assets at the date of marriage and the date of separation to determine their net family property.  The spouse with the higher net family property value pays the other spouse half of the difference between these two values which is referred to as an equalization payment.

 

Property that is excluded from the Net Family Property calculation, if it exists on the date of separation includes:

• Property obtained by way of inheritance, monetary damages or life insurance proceeds.
• A gift from a third party.
• Property specified in a marriage contract or pre-nuptial agreement to be excluded from net family property. 

Property included in a net family property calculation includes:

• Land, building, bank accounts, businesses, stock options and pensions and chattels etc.
• Items that were purchased together, such as a boat, are considered joint property and each spouse would be entitled to half of the value.

Matrimonial Home

 

A matrimonial home is property that spouses lived in at the time they separated.  Spouses may have more than one matrimonial home such as a cottage, chalet, farm or out of town property, regularly used by the family.  The matrimonial home is included in the property calculation even if it is owned by only one spouse.

 

Note:  If a property was owned by one spouse at the date of marriage and the spouses lived in it but sold it before separation it is not a matrimonial home and the spouse who owned it can deduct its date of marriage value (the equity) from their property calculation.

 

Equalization Payment Example

 

                                                                                         Husband                                 Wife

 

Date of Marriage Net Worth                                          40,000                               30,000

Date of Separation Net Worth

Value of Assets                                                                140,000                            100,000

  Subtract Debts                                                                -20,000                             -20,000

Net Amount                                                                      120,000                              80,000

Calculate Net Family Property - Wife

Date of Separation Net Worth                                       120,000                              80,000

  Subtract Date of Marriage Net Worth                          -40,000                             -30,000
Net Family Property                                                          80,000                              50,000

Subtract the lower net family property value from the higher one

Husband’s Net Family Property                                      80,000

Subtract Wife’s Net Family Property                              -50,000
Difference                                                                            30,000 

 

Equalization Payment (Half of the Net Family Property Difference)    $15,000

 

Divide the difference of the two Net Property Values in half to obtain the equalization payment due from the spouse with the larger Net Family Property Value. The husband pays the wife an equalization payment of 15,000.

 

Additional information regarding property division and divorce is available at Life Events - Dealing with separation and divorce.

 

Common Law Relationships

 

Common law partners in Ontario do not have the same rights to equalization of net family property as married spouses. The claim against each other is with respect to property varies depending on their individual circumstances and contributions and they do not receive automatically receive an interest in the matrimonial home.

 

Pensions

 

A pension is a very valuable asset which must be included in the calculation of net family property.  It may be the most valuable asset to be divided in a divorce. Here are three key points you should know about pension division:

• In Ontario, upon separation, a couple who are divorcing must determine his or her net worth. This is accomplished by adding up the value of assets and subtracting the value of liabilities. The spouse with the largest net worth pays half the difference to the other person so that they both have the same net worth. This is known as equalization of family assets.
• The value of the part of the pension plan accrued during the marriage is often the foremost single asset. The determination of the value of this asset may be calculated using various actuarial methods and as a result the value of the same pension will vary depending on the applied approach.
• If the parties were married before the member joined the pension plan, the date of marriage is not used when calculating pension values. But, if the parties were married after one spouse joined their pension plan, the value of the part earned before the marriage must be subtracted from the total earned to the valuation date. There are two methods of valuing such pensions accrued to the date of marriage.

It is crucial to retain a lawyer with expertise and experience in this field who understands pensions to ensure the most effective method is applied on your behalf.

 

Canada Pension Plan Splitting

 

Upon separation, the Canada Pension Plan pension credits which accumulated during a couple’s relationship are divided between both parties. This division is called "credit splitting".  The credits of one person who earned less are increased to match the credits higher earner.

 

Canada Pension Plan benefits are automatically transferred from the one spouse to the other. Canada Pension Plan maintains proof of your pensionable earnings and contributions which escalate as you continue to pay into the Plan. The more credits you have, the larger your Canada Pension Plan benefit will be.