Property & Business Division

Property & Business Division

The Family Law Act is the legislation that applies in the province of Ontario to the division of property between spouses upon a marriage breakdown.  This means separation or even a death, if a spouse is not provided for adequately in the deceased spouse’s last will and testament such that the surviving spouse elects for the division of net family property within six months of his or her spouse’s death. 

The philosophy of the Family Law Act is that, subject to certain exceptions, any financial growth during the marriage is to be shared equally by both spouses.  Accordingly, upon marriage breakdown (normally separation or death), a calculation is done separately for each spouse to determine the growth in value of the spouses’ net assets during the marriage (called that spouse’s “net family property”). 

The Family Law Act then prescribes that a payment be made by one party to the other (called “an equalization payment”) to provide for equal financial growth during the marriage.  Simply put, the spouse with the higher net family property would then pay the spouse with the lower net family property, one-half of the difference between the two values, this being the equalization payment.

The division of net family property under the Family Law Act does not give a spouse a right to a specific asset, only the right to an equalization of net family property through a monetary payment or possibly, an exchange of assets, if the spouses agree.  There is no actual sharing of property and each spouse is entitled to retain whatever property he or she owns, subject to the requirement that at the end of the day one spouse may have to make a cash payment, or an agreed transfer of property in lieu of cash payment, to the other spouse.  There are exclusions of certain types of property such as inheritances received by a spouse during the marriage and special rules apply to the matrimonial home, which is the home that the spouses live in on the date of the separation or death, if the surviving spouse elects within six months of the death of his or her spouse to take under the Family Law Act rather than the will of the deceased spouse.

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Property & Business Division

While a property division seems to be a straightforward mathematical calculation, often numerous disputes can arise.  The date of the separation may be in dispute.  Often a relationship ends gradually over a period of years with spouses continuing to reside in the same home even though they may over time share separate rooms and have less and less sharing of the time they spend together.   This may result in each spouse believing that the relationship has ended at a different date, so that the date of separation becomes a factor to be determined. 

While many assets and debts are easy to value such as the amounts in the bank account, many other assets and debts are not that easy to value, are complicated and may require an expert valuation. One common example of this is a pension. There are also issues involving whether the disposition costs should be paid. These disposition costs can include future tax liabilities or disposition costs on a property such a real estate commission for selling a property. Sometimes investments such as Mutual Funds have costs to convert them into cash and therefore are in dispute. A couple may have received money from parents or other family members. The dispute can often arise when a couple separates as to whether the money was gifted to them jointly or was a loan that needed to be paid back. Often times this becomes difficult to establish because of the lack of formality that occurs among family members.

Occasionally there are issues of disputes regarding who owns a property and claims can be made for partial ownership of a property by way of what is called a
“Constructive Trust”.   

We can work with you if any of these issues have to be presented and argued for determination by a court or to be worked out outside of court with your spouse to reach a settlement.


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Legal Term Glossary

Estate Litigation: There are many pertinent pieces of legislation that need to be taken into consideration when conflict arises over an estate. Many steps can also be taken to implement creative resolutions including minimizing the taxes payable upon death, including capital gains, income and probate fees. The expertise of a knowledgeable and experienced lawyer is vital to resolving conflicts over estates.