The property division, Among the legal rights of individuals seeking a divorce is the right to an equal share of the family property. In family law, this is referred to as an “equalization” of “net family property” (NFP). Each partner’s NFP is calculated by subtracting his or her debts from his or her assets. Once the NFP is calculated for each spouse, the spouse with the lower NFP is entitled to one-half of the difference between the two amounts. However, the rights of common-law spouses differ from those of legally married spouses.
Division of property for married couples is governed by the Family Law Act in Ontario. The property they individually acquired is theirs to keep. Any property acquired by a spouse during the marriage and retained until separation needs to be equally divided between the spouses.
Spouses will also need to share the rise in the value of the property held by a spouse on the date of marriage. Equalization payment refers to the payment made by one spouse to another to balance out the sharing of property value amongst each other. It is also known as equalization of net family property.
Law Wise family Lawyers regularly meet with clients who require help figuring out how to split their property upon divorce. In order to ensure that our clients receive their fair share of the family’s assets, we begin each case by facilitating the exchange of financial disclosure between the parties to determine how much each party is entitled to receive.
Exclusions to family property
Few exceptions exist which are known as excluded property. Any gifts or inheritance received during the marriage from anyone other than the spouse comes under exclusions. It is prudent to note that these gifts should not have been applied towards the matrimonial home.
Exchanging detailed financial disclosure with your ex-spouse or their lawyer is extremely important, as it provides a framework for determining which of the family’s assets and debts should be split and which should not. The reason for this is that not all property will be subject to sharing between the spouses. For example, if one of the parties receives an inheritance, that money may or may not be excluded for that party’s “net family property,” depending on how the funds were treated. Therefore, there are ways to protect certain funds from being split between the couple upon separation and divorce. Once we determine the amount for equalization for your particular case, we help you negotiate how the property will be divided, according to your goals and interests.
Keep the timeline in mind
If you are contemplating separation and would like to obtain answers to these or similar questions, please contact our office to schedule a consultation. At your consultation, you will meet with one of our lawyers, who practice exclusively in family law, and will receive information on your rights and obligations upon separation or divorce. If you have already separated from or divorced your former spouse, you should seek legal advice immediately, as the Family Law Act places limitations on the time that a former spouse has to make a claim for equalization.
For many couples, the home in which they lived throughout their marriage will be their most valuable asset. The law takes this into account and provides for special treatment of the “matrimonial home.
At the time of separation, the home in which the legally married couple resides in is classified as a Matrimonial Home. It is possible that more than one matrimonial home exists, like a cottage.
In Ontario, married spouses have an equal right to stay in the matrimonial home. The right is valid even if the legal title of the property is in only one of the spouses’ names.
The matrimonial home cannot be sold or mortgaged without the other spouse’s written permission.
Separation of Common Law relationship
Property sharing clauses are not applicable for couples in common-law relationships. Only trust claims are allowed to balance out the contributions of the spouses to the properties owned by them.
All assets of a partner in a common-law relationship whether purchased before or during the marriage belong to them only. If any asset increases in value during the relationship, the other partner has no right upon such increase.
Effect of Pre-nuptial agreement on property division
A prenuptial agreement made before marriage between the two spouses will be enforced at separation and division of property will be done as per the terms outlined in the agreement.
A common law couple can prepare a Cohabitation Agreement and a married couple can prepare a marriage contract. These agreements outline the terms and conditions for dealing with debts, property and finances during the relationship and how to deal with them in event of separation.
The agreement will be legal and valid once the two spouses and witnesses sign it. Complete financial statement should be done prior to its drafting.
The court may not enforce the agreement or change it once it is evident that one spouse:
- Abstained from revealing their complete finances
- Did not understand the agreement, or
- Signed the agreement under pressure
Law Wise family lawyers in Toronto, Mississauga, and Brampton will help in making effective representation in your property disputes and net family property valuations.