If you get divorced in Ontario, the answer can be confusing. Divorce law in Ontario falls under the Family Law Act and it focuses on ensuring couples leave the marriage on relatively equal footing.
When it comes to splitting finances in divorce cases in Ontario, there is one main aspect that the law focuses is on which is the fact that “all things equal”, meaning that you and your partner keep an equal amount of the properties you acquired during the marriage. This is what is referred to as your net family property calculation.
After the initial split of all things in your joint name, it then needs to be determined what assets were brought into the marriage from each individual as there is a date of married deduction for these items. Usually, this property remains with the party who brought them into the marriage unless negotiated otherwise. This likewise applies to any inheritances, or significant gifts, one party received, so long as they were kept separate and solely in that party’s name.
It is important to note that not all net family property calculations are equal. There are certain circumstances that come into play, such marriages of short duration, where the court may veer from an equal division. The courts in Ontario define a marriage of short duration as one that is less than five years.
It is important to keep in mind that it is not the asset itself that is split, but rather its value. For example, if you own a $40,000 car, the car does not have to be sold but you have to pay $25,000 to your spouse (in the overall calculation) in order to equalize the value. That is to say, if you had the car and your spouse has a $50,000 boat and you have no other assets, your spouse would have to pay you $5,000 on separation to equalize your positions.
In terms of debt, the law assigns your debt to your name. If you share that debt with another person the debt is split after the divorce. For example, using the car and boat example above, if your spouse also has a $$5,000 credit card debt and there are no other debts between you, your spouse would now owe you $2,500 on separation to equalize your positions.
Pensions are another asset that needs to be sorted out and included in the net family property calculation. The pension administrator can help with the splitting of these funds within the pension itself, or the values would form a part of the equalization process described above. In some cases, an actuary and/or accountant may need to be involved to determine the true values.
Deciding what to do with the family home is a large part of the divorce process. The Matrimonial Home differs from other assets as it has a specific status under the Family Law Act. Your matrimonial home is just that even if it was purchased before you were together, meaning the date of marriage deduction does not apply to it. The matrimonial home is more than just a primary residence — it can be applied to vacation homes, cottages, condos and other types of properties. Ontario law allows you to have access to all the properties unless a judge rules otherwise.
Divorce law can be very complicated and information from the internet will only tell you so much. It is important to consult a lawyer before any legal actions occur. For a free 30-minute consultation please contact us today. Asset splitting can be difficult but here, at Epstein and Associates, we will fight to help achieve your goals.