In Ontario, only married couples have the statutory protection of Equalization on family property under the Family Law Act. Common-law spouses do not have that statutory protection and their rights and obligations would have to be carefully considered on the facts of their particular case. If you are married however, the legislation sets out a very clear statutory scheme for equalizing net family property. What does that mean? Well the basic proposition it that the increase in wealth that accrues during a marriage is to be divided equally upon separation. It’s important to note that in Ontario, marriage does not affect ownership of assets or debts; the assets or debts belong to the spouse who owns them. The act only provides the spouse entitled to an equalization payment to a potential entitlement to a monetary amount.

So how do we go about doing this? We start by exchanging sworn financial statements, your lawyer will help you prepare that. This is a detailed document which must be compiled very carefully which sets out all of your assets and debts on date of separation and date of marriage; it will also detail information with respect to income. Once the financial statements is received, the parties will also exchange financial disclosure briefs which is basically the supporting documentation for all the assets and debts. Many of the assets and debts are quite simple to prove; bank statements, credit card statements, etc. Other assets and debts are a little more complex, for example an interest in a business; that may require the assistance of an expert to provide an opinion of value. Pensions are unique in Ontario, there is a specific statutory scheme for valuing pensions is actually done by the pension administrator in accordance with the regulations under the Family Law Act. The information simply has to be provided, forms have to be filled out and the pension administrator will then provide the family law value. Important to note however that the family law value provided by the pension administrator will be the gross value without any tax consequences, so further allowance then has to be made with respect to the anticipated tax that the pension holder will pay upon retirement.

Once all the information has been exchanged, the lawyer is in a position to do the calculation of Equalization of net family property and this in simple terms is the difference between that spouse’s net worth on date of marriage and that person’s net worth on date of separation. The practical complexity with date of marriage is often that it is difficult to obtain evidence of what the spouse may have owned or what liabilities he or she may have had on date of marriage. If the onus is on the spouse claiming the deduction on date of marriage to prove it, unless the other party admits it. If however you are able to prove that you had a net worth on a date of marriage, this has a clear impact on the Equalization entitlement and is a very important step in the process. There are a few exceptions under the Family Law Act to what is or is not included in an equalization of net family property. A gift from a third party, so someone other than your spouse, that can be traced to a specific asset other than the matrimonial home, can be excluded or in other words you don’t have to share that with your spouse. Similarly, an inheritance received during the marriage that can be traceable to something other than the matrimonial home can be excluded.

Should you have any further questions or concerns, please contact us or consult our website sbmblaw.com.