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Property Division

The Divorce Act does not deal with sharing your property or debts. Each province and territory has its own laws that set out the rules for dividing the property and debts you and your spouse have. In Ontario, the law dealing with property applies only to married spouses.

“Property” includes such things as the home you and your spouse shared, its contents, any other real estate, pensions from employment, Canada Pension Plan credits, RRSP.s, investments, bank accounts and cash. Debts include such things as amounts you owe on your credit cards, your mortgage, and any loans you have. It is very important that the property and the debts of the marriage are accurately valued. One would also be well advised to receive legal advice on property division.

 

One starts from the premise that marriage is a partnership of equals. This being the case, parties should share equally in the property of the marriage—i.e. property minus debts from the date of the marriage to the date of separation, minus property and debts brought into the marriage, minus excluded property (such as inheritance or gifts from third parties). In Ontario, family law does not affect property law. In other words, property itself does not change hands upon the dissolution of the marriage. If you own a cottage, entirely in your name, for example, this property remains under your name. Rather, the property provisions of the Ontario Family Law Act calls for an equalization of the ‘wealth’ of the marriage. In other words, it is not the property per se that must be divided equally, but the value of this property. Upon the property of the marriage being equalized, both parties are supposed to have the same ‘net family worth’.

 

There are some exceptions to the general rule. For example, there are possibly exclusions and deductions for property—i.e. amounts that you do not have to include in your net family worth—such as property owned prior to marriage, gifts from third parties or inheritances received during the marriage. There is also the issue of the matrimonial home that can at times prove troublesome. Finally, the Court does retain the discretion to award a spouse an amount that is more or less than half the difference between the net family properties, under certain circumstances.

 

One would be well advised to seek the advice of a family lawyer or family mediator if property division is an issue. It might also be prudent to consider a domestic agreement or marriage contract if one is bringing a valuable piece of property into the marriage, one that is likely to be used as the matrimonial home.

 

Common law spouses and property

The property provisions of the Family Law Act only apply to married couples (both opposite sex and same sex). These provisions do not apply to common-law couples. This outdated aspect of the law can lead to some very unfair results for common-law couples, although other recourse may be available (for example, via a resulting and/or resulting trust claim, or through the relatively new legal construct of ‘joint family venture’). This is a complicated area of law, and one would be well advised to consult with a family lawyer if one believes one has a potential claim.