CanLaw Guide to Family Law
Separation - Divorce - Custody Access - Support - Child Support Paternity - Property Division
How Your Property Is Divided Upon Separation
Marriage is the first step on the road to divorce
Net Family Property:
Each spouse must calculate his or her net family property on your date of separation.
How to Calculate Your Net Family Property:
(You must include the value of the matrimonial home in your net family property even if you used proceeds from exempted items to help pay for your home.)
- Add up the value of all your assets on your date of separation.
- Subtract the total of your debts and liabilities on your date of separation.
- Now, deduct the value of all the assets you had on the day you married.
- Also deduct the value of items that are not considered family property such as inheritances, life insurance proceeds, gifts from outsiders, and personal injury or other court awards and settlements. However you must be able to establish and prove that these assets were separate from family property throughout the marriage.
- Finally, you add the value of all your liabilities on the date you married. This figure is known as your net family property
The Matrimonial Home
While the husband has a right to live in the matrimonial home after separation, wives often use false allegations of abuse to get restraining orders effectively evicting the man from his own home. Beware.
The matrimonial home is treated differently from other property in two ways.
Regardless of who supplied the funds to buy and run the home, your wife gets a half interest in it even if she did not contribute a penny.
You get no credit for the home when you separate even if you owned it on the date of marriage.
Property Division in Divorce in Canada is like dividing a gold mine. The wife gets the gold and the husband gets the shaft
It is the VALUE of your property and assets that is divided on separation,
not necessarily the property itself
Property or assets often have to be sold to fund the equalization payments to your ex wife.
Get a Paternity Test
The spouse with the higher net family property is required by law to pay his spouse an equalization payment.
The equalization payment is half of the difference between the two spouses' net family properties.
Determining the Equalization Payment
Determine the difference between your net family property and your spouses net family property by subtracting the lower from the higher amount
The spouse with the larger net family property, (usually the man) has to pay half the difference to the other spouse, (usually the woman)
The equalization payment is a gift to the underachieving spouse so that both spouses have equal net properties at the end of the marriage regardless of whether she ever did anything to earn it. Women's equality seldom includes paying their own way.
Common law spouses are not entitled to an equalization payment.
These items are NOT included in your net family property calculations:
The Value Of Your Degree Or Licence
Your degree or professional licences are not to be valued and included in your net family property.
However, if your spouse supported you while you were going to school for your licence or degree, your spouse would normally be granted spousal support for this. The fact that you have supported her ever since does not matter. This does not seem to apply when the husband puts the wife through school at his expense.
Property Acquired After Separation
Your spouse is not entitled to a share of any property you may have acquired after your separation. So if she happens to win the lottery the day after, you are out of luck.
Common law partners may be entitled to a portion of her partner's assets and she can file a claim for something called "Unjust Enrichment."
A court may find that she has a genuine interest in her partner's assets and rule that she is entitled to compensation because she helped acquire them during your time of cohabitation.
You will need to consider the tax implications of your child and spousal support payments, legal fees, Child Tax Benefit, Equivalent to Spouse credit, and the taxes on the division of your property and any other transfers of assets or cash that changes hands in your divorce.
Can You Reduce Your Equalization Payment?
Generally no. In almost all cases, you must pay the full amount of money to equalize you and your spouse's net family property. If this means liquidating assets at a loss to come up with the cash, you have no choice.
Courts will almost never reduce the payment, but there are a couple situations where you might succeed.
A court might reduce the amount of your payment if it finds the calculated payment would be unconscionable. However, define "unconscionable."
If you can prove that your spouse was reckless with family assets, the court might reduce the equalization payment .
If you and your spouses have lived together for less than five years the amount may be reduced.
Tax Consequences On Your Equalization Payment
Equalization payments are not taxable.
There are tax regulations that allow RRSPs to be transferred between spouses as part of a divorce settlement so that there are no tax consequences.
If as part of the payment one spouse purchases the other's spouse's share of property for example, in a cottage the capital gains tax may be post phoned
Consult a qualified tax expert if your assets are significant.
These items must be included in your net family property calculations:
The Value of Your Business (if you own one)
You will probably need to hire a professional business evaluator to determine the value of your business. You will have to pay a share of the value of your business to your spouse regardless of her contribution to the company, if any.
Your pension is probably worth a great deal more than you think. Your pension will need to be valued by an actuary and its total value will need to be included in your net family property.