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Property

Each Province has jurisdiction over division of property in cases of separation. The rules vary from Province to Province.

In theory, the Ontario Family Law Act establishes a regime of separate property with an equalization mechanism (a mechanism to share the increase in wealth during the marriage).

However, separating spouses must understand the very basic principle that, at the outset of the analysis, each spouse owns his respective property upon marriage breakdown. There is no rule that spouses jointly own property. If one spouse has RRSPs, they belong to that spouse.

DIVISION – PHILOSOPHY (PROPERTY)

The underlying philosophy of the Ontario law is to ensure that the spouses share the wealth accumulated during the marriage. This is done through an equalization process.

In simple terms, the spouse who is “worth” the most on the date of separation pays to the other, a sum of money which ensures that both spouses “leave” the marriage with an equal value. This is known as the “equalizing process”.

At this time, the property regime in Ontario does not apply to parties living “common-law” nor does it apply to “same sex marriages”.

DEDUCTIONS AND EXCLUSIONS (PROPERTY)

The law does allow spouses to reduce his or her “value” by deducting debts in existence as at the date of separation (valuation date) and by deducting his or her “net worth” as of the date of marriage.

Furthermore, certain items, acquired during the marriage, can be excluded from the whole process and is therefore not “counted” in the calculation of one’s net worth (one would, generally, think of an inheritance).

The reader must be informed that this is a complex area of the law and an inheritance can, sometimes, “lose” its characteristic as an exclusion.

Although the law attempts to ensure that both spouses “leave” the marriage with an equal value, the end result may not always be such.

LOGIC (PROPERTY)

The logic behind the mechanism is to ensure that spouses share only in the increase of their respective values during the marriage. Therefore, if one spouse has $100,000.00 in the bank at the date of marriage and has a net value of $150,000.00 as at the date of separation, his / her net worth, for property settlement, in such a case, is $50,000.00 (the increase in his value during the duration of the marriage).

Example of equalization

Date of separation = August 1, 2017
Date of marriage = August 1, 2007

ASSETSWife / valueHusband / value
Home (joint)$ 150,000.00$ 150,000.00
Car$ 10,000.00
Car leasedNIL
Bank (joint)$ 2,000.00$ 10,000.00
RRSP$ 10,000.00$ 2,000.00
Pension$ 50,000.00$ 40,000.00

DEBTSWife / valueHusband / value
Mortgage$ 50,000.00$ 50,000.00
Car Loan$ 2,000.00
Sub total property
$ 170,000.00$ 152,000.00
Less propery on date
of marriage
Cash$ 40,000.00
Net worth$ 130,000.00$ 152,000.00

In this case, the husband is worth $22,000.00 more than the wife, Therefore, the husband owes the wife $11,000.00 leaving each spouse with a net worth of $141,000.00.

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