It is critical to know that whether parties are a married or common-law couple, as it will determine how property is addressed upon a breakdown of a relationship. Property rights in Ontario are set out in Part I of the Family Law Act. Only married or formerly married spouses have rights under this part.
What happens if you are/were married?
When a marriage breakdown occurs, Part I of the Family Law Act is operational. This means that separated spouses, unless they have an agreement to the contrary, will be subject to the equalization regime. Equalization of net family property seeks to equalize the spouses’ growth in their respective net worth over the course of the marriage. This is done by calculating each party’s net worth on the date of marriage and on the separation date. Once a net family property value has been determined for the spouses, the spouse with the greater net family property pays the spouse with the lesser net family property an equalization payment that is one-half the difference between their respective net family properties.
If a spouse’s net family property is less than zero, it is deemed to be zero for the purposes of calculating the equalization payment. If both parties have zero as their net family property, then neither will owe the other an equalization since there is nothing to equalize. This usually only happens when the properties’ values have declined during the marriage.
What is excluded from a party’s net family property?
The main, but not sole, exclusions are the following:
- property other than matrimonial that was received as a gift or inheritance from a third person after the date of marriage;
- income from a gift or inheritance, if the donor or testator has expressly stated that it is to be excluded from the spouse’s net family property;
- damages for personal injuries, nervous shock, mental distress or loss of guidance, care and companionship, or the part of a settlement that represents those damages;
- proceeds of a life insurance policy that are payable on the death of the life insured.
What is the limitation period in which you can bring a claim for an equalization of net family property?
A party has six years from the date of separation or two years from the date of divorce to bring a claim for an equalization of net family property. If the time period has lapsed, you can ask the court for an extension of time to bring an application for equal division of net family property.
What if you are not married, but are common-law spouses?
The Family Law Act, with respect to property, does not apply to common-law spouses. Common-law spouses will address property issues based on legal ownership and in some circumstances, trust principles.
How can our lawyers at Frenkel Tobin help?
We have extensive experience addressing property issues of both married and common-law spouses. We work to ensure that you obtain a fair resolution to your property issues.