One of the most contentious issues between former spouses is property division after divorce, especially if there is no prenuptial agreement or marriage contract. As a result, intense uncertainty surrounds the issue of property entitlement after divorce.
What Qualifies as Property
The property includes assets, joint bank accounts, debts accumulated throughout the marriage, real estate, pension, and business property. According to Ontario Family law, any asset or property acquired during the marriage and it is still existent at the time of divorce must be shared between the spouses. The appreciation of assets owned at the time of the marriage must also be shared equally. This sharing of the value of assets is commonly referred to as equalization.
Steps Followed in the Equalization Process
The steps followed during the equalization process are:
- A thorough examination of every spouse’s financial position at the date of marriage and the date of separation or divorce
- For each date, the spouse’s assets are added, and his or her debts and liabilities are deducted to determine each spouse’s net value at the relevant dates
- Each spouse’s NFP (net family property) is calculated by deducting the financial position at marriage date from the financial position at separation. The figure obtained helps to determine who has a higher NFP.
- After deducting the lower NFP value from the higher NFP value, the figure obtained is divided by two to determine the equalization payments.
Matrimonial Home
The Family Law Act gives a matrimonial home special consideration. Both spouses have a right to the matrimonial home regardless of whose name appears on the title. Therefore, both parties must consent to the sale or rental of the matrimonial home. Some people assume that a spouse can limit the other spouse through a marriage contract, but this is a misconception. If spouses fail to decide what to do with the matrimonial home, the matter is left to the court. When handling issues regarding the matrimonial homes, the court considers if children are involved and who has custody of the children.
Common Exceptions
The equalization method may seem simple and straightforward but is often complicated by inheritances, gifts, properties owned outside Canada, businesses owned by one spouse, hidden assets, proceeds from a life insurance policy, and money obtained through accident settlements. If the outlined properties were received during the marriage from another party other than the spouse, they might be excluded from the property division in Ontario. After the property was obtained, it should be evident that it was kept separate and was not used towards the matrimonial home.
Other exceptions to property division may result from the provisions of marriage contracts. A marriage contract, which is an agreement signed at or after marriage, outlines the rules governing marital issues and the division of the couple’s property in case of separation, divorce, or death. Marriage contracts often outline:
- Which spouse will own certain property and the division of property if the spouses separate
- If spousal support will be paid, the agreement outlines the set amount of spousal support
- Any property designated as the matrimonial home
- If there is a prevention of one spouse from gaining access to the other spouse’s pension
The division of property after divorce is a sensitive issue that could result in disputes between spouses, leading to delays and making the property division process complicated. Working with an experienced divorce lawyer Toronto makes the process simpler. To learn more about the topic visit website for Simple Divorce.
