• by Carly Mellon
During the breakdown of a marriage, one might wonder what is going to happen to their property and their assets.
In Ontario, the Family Law Act explains that property that is acquired during your marriage is to be split equally when that marriage ends. This property can include your home, furniture in the home, cars, money, pensions, as well as businesses.
However, there are some exceptions as to what property is not included in property division. The exceptions include property (from someone other than you spouse) that you inherited or were gifted during your marriage, if you received money from an insurance company upon someone’s death, money you received as a result of an injury, and if you and your spouse have an agreement that details what property is not to be divided.
You might be asking, what if the family’s home, a.k.a. matrimonial home, was gifted or was an inheritance? Even though it may have been a gift, and typically gifts are excluded, the matrimonial home does not count as excluded property and must be divided. It is important to note that property division discussed in the Family Law Act applies only to spouses that were married and not to common-law spouses.
Now that we have discussed the types of property and assets that are to be divided, the next step is to determine how that property gets divided. This doesn’t only mean which spouse gets the couch and which spouse gets the TV once you’ve separated, rather it also has to do with the value of the property. What this means is understanding what a Net Family Property Statement (NFP) is.
In a nutshell, the NFP is the net growth of all your assets from the date of marriage until the date of separation.
To determine your NFP you need to complete a financial statement, which essentially lists the value of your assets and debts on your date of marriage and the valuation date (date of separation).
This is where you will list the property discussed above such as cars, all bank accounts, pensions, and any gifts or inheritances. The total value for each date is calculated at the bottom of the financial statement.
To calculate your NFP you first add the value of your assets together from your valuation date and subtract all your debts from your valuation date.
Second, you subtract all assets less your debts from your date of marriage.
|Valuation date assets ($130,000) minus valuation date debts ($30,000)||$100,000.00|
|Marriage date assets ($50,000) minus marriage date debts ($20,000)||$30,000.00||Valuation date ($100,000) minus marriage date ($30,000)||$70,000.00|
|Valuation date assets ($210,000) minus valuation date debts ($40,000)||$170,000.00|
|Marriage date assets ($60,000) minus marriage date debts ($10,000)||$50,000.00||Valuation date ($170,000) minus marriage date ($50,000)||$70,000.00|
Partner A’s NFP is $70,000.00 and partner B’s NFP is $120,000.00.
Since Partner B has a higher NFP, they would owe Partner A half of the difference between the NFP’s, this is called the equalization payment valued at $25,000.
The exact calculation of the equalization payment would be as follows: $120,000 minus $70,000 = $50,000. $50,000 divided by 2 equals, $25,000.
Hopefully this helps to provide a simple explanation of division of property and net family property in Ontario. If you have any further questions or want to discuss your situation with a family law lawyer, please reach out to the staff at Frenkel Tobin LLP. We would be happy to help.