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How is property divided between married spouses in Ontario?

Equalization: How is property divided between married spouses in Ontario?

One of the most frequent questions we get from newly separated clients is “how will our property be divided?” A common misunderstanding is that separated spouses split all of their assets 50/50 (i.e. you are each entitled to 50% of everything you own). While, the laws of Ontario do aim to equally divide assets between separated spouses, the mechanism by which the assets are divided is somewhat more complex than a simple 50/50 split. It is often referred to as a “deferred communal property regime”.

The calculation is called “Equalization of Net Family Property”. The assets and debts that you and your spouse accumulated throughout the marriage are included in the calculation. Any assets and debts held on the date of marriage are deducted from the calculation. Some assets are excluded from the calculation, such as gifts from third parties, inheritances, and any monies received as a result of personal injury claims. Special rules apply to the Matrimonial Home. Whoever claims a deduction or exclusion has the onus of proving same and all exclusions must be traceable to the date of separation.

For each spouse, a balance sheet of assets/property owned at date of separation is created. From this, the spouse’s debts and liabilities are deducted, along with any property owned at the date of marriage and any exclusions. The critical dates for determining the parties’ Net Family Property are the date of marriage and the date of separation (also called the “valuation date”). Basically, the calculation is as follows:


All Assets on the date of separation

  • All debts on the date of separation
  • All property owned on the date of marriage (except for the matrimonial home – there are special rules that apply to the matrimonial home)
  • All applicable and proved exclusions

= Net Family Property


Once each party’s Net Family Property is determined, the smaller Net Family Property is subtracted from the larger Net Family Property and half of the difference between the two figures is paid to the party with the lower Net Family Property. This is called the “equalization payment”. Each spouse is, therefore, entitled to 50% of the value of the accrued property and not 50% of the property itself.


It is important to note, that this discussion pertains to married spouses only. The division of property upon the separation of common law spouses differs from that of legally married spouses.


Exchanging detailed sworn Financial Statements with your spouse is an important step in determining what, if any, equalization payment is owing. Dividing property can be a complicated calculation, especially if a couple has accumulated substantial assets together (such as investments, property, pensions, artwork, and businesses, just to name a few). There are also time limitations that the Family Law Act sets out with regard to equalization of Net Family Property. It is therefore very important that you seek legal advice from a qualified family law lawyer when you separate from your spouse. Our team is committed to ensuring that you understand the process and that your rights and property are protected. Please feel free to contact us, if you have separated and are in need to assistance in dividing your assets.


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