You are here
We're married. How do we divide our property and debts if we separate or divorce?
Find services
Was this information helpful?
In most cases, the law says that married couples have to share the value of their property if they separate or divorce. This means that the partner who has more property usually pays money to the partner who has less property. Usually, the property itself is not physically divided.
To share the value of your property at the end of your relationship, you have to first list and value all of your assets and debts.
This helps you calculate your net family property (NFP). NFP is how much money a married partner is worth at the end of the relationship after taking into account what they brought into the marriage.
To calculate your NFP, you add together all assets and subtract all debts that you had at the end of your relationship. This is usually on the day you and your partner separated. Then you also subtract all assets less all debts you had on the day you married.
Some assets or debts are treated differently in this calculation. For example, some gifts and inheritances are not included. There are also special rules about your matrimonial home.
Your partner also calculates their NFP. You then use your NFP and your partner’s NFP to figure out who has to pay the other partner and how much. The money one married partner pays the other partner when they separate is called an equalization payment.
You can talk to a lawyer who can help you figure out what your equalization payment is.
If you can't afford to hire a lawyer for your whole case, some lawyers provide "unbundled services" or "limited scope retainer" services. This means you pay them to help you with part of your case.
If you can't afford to hire a lawyer at all, you may be able to find legal help in other places.
1. List and value all your assets and debts
If you are dividing your property through an equalization payment, the first step is to make a list of all your assets and all your debts.
Use financial statement forms
A financial statement is a court form that has details about your income, expenses, assets, and debts. It can help you and your partner list all your assets and debts. Then you can use it to help you divide those assets and debts.
You don't have to use the court's financial statement forms if you don't go to court. But many people find them helpful because the forms tell you the types of things that you need to list, and how to calculate your net family property (NFP). They also have some instructions on what you shouldn’t include in your NFP.
The court has 2 financial statement forms. If you want the court to divide your property, you must use Form 13.1: Financial Statement (Property and Support Claims). This form requires you to list all of your property, called “assets” on the form, and all of your debts.
Include the value of assets and debts
In Form 13.1 you must give the value of assets and debts on three different dates:
- The date of marriage: This date is important because the equalization payment considers what you already had when you got married.
- The "valuation date": This is usually the date you separated from your partner. It is important because the equalization payment is calculated by looking at the value of your assets and debts at the end of the relationship.
- Today: This date is important because sometimes the court also wants to know what has happened to assets or debts since you and your partner separated.
It is very important that you and your partner give complete and honest information to each other about your financial situation. This is called financial disclosure.
You should give copies of the documents that support the information in your financial statement. These could be things like:
- bank statements
- credit card statements
- mortgage documents
- line of credit statements
Your documents should be dated as close as possible to the date of marriage, the valuation date, and today's date.
The value of homes, cars, real estate, and businesses can be harder to determine.
You can hire a financial professional to determine the value of these assets if you and your partner can't agree. Or sometimes you and your partner may agree on a value after looking at how much similar assets are listed for. For example, you could look at car ads online or in newspapers to get an idea of how much your car is worth.
If you go to court, you have to give copies of these documents to your partner and complete a Form 13A: Certificate of Financial Disclosure. In Form 13A, you list all the documents that support your financial statement.
2. Learn what assets have special rules
Not all assets are treated the same way when you calculate your net family property (NFP). Here are some examples of the most common assets that have special rules.
Matrimonial home
Your matrimonial home is the home where you and your married partner lived together before you separated. A matrimonial home can be a house, townhouse, apartment, or co-op unit.
You can also have more than one matrimonial home. For example, you may have an apartment and a cottage.
A matrimonial home can be owned or rented. But you don't have to list a rental home on your list of assets if you don't have some sort of ownership interest in it.
If you or your partner owned your matrimonial home on the day you were married, there is a special rule that applies.
In this case, you include the value of your home on the date of separation. You also include any debt related to the home, like a mortgage, on the date of separation. But you do not subtract the value on the date of marriage or consider the debt related to the home on the date of marriage like you would for other asset or debt. This means that the total value of the home on the date of separation is shared in the equalization calculation, not just its change in value during the marriage.
For example, let's say the matrimonial home is only in your name and it was worth $175,000 on the date you married and $200,000 when you separated. You have to share the full value of $200,000 with your partner.
Now (Separation Date) = $200,000 value of your matrimonial home
Then (Marriage Date) = $175,000 value of your matrimonial home
Now value (no credit for Then) = $200,000
You have to share the full value of the home now, with no credit for the value on the day you got married = $200,000
To show you how this is different from other assets, compare this to a bank account. Say you had a bank account in only your name that was worth the same amount, $175,000 on the date you married and $200,000 when you separated. In this case, you only have to share the $25,000 change of value.
Now (Separation Date) = $200,000 in your bank account
Then (Marriage Date) = $175,000 in your bank account
Now – Then = $25,000
The increase in value that you have to share is $25,000
There are different rules that apply to a home on a First Nation reserve.
Gifts and inheritances
Your NFP does not usually include any gift or inheritance you receive during your marriage from someone other than your partner, as long as you still have the gift or inheritance at the end of the relationship. These items are sometimes called "excluded" property.
This applies even if you used a gift or inheritance to buy something for yourself. For example, if you can prove that the $5,000 you inherited was used to buy your car, the value of your car is not included in your NFP calculation.
But, if the gift or inheritance was used to buy assets for your partner, to buy assets for both you and your partner, or if it was put into a joint bank account, it can be harder for you to prove that the whole gift or inheritance shouldn't be included in your NFP.
If the gift or inheritance was used to buy or help pay for your matrimonial home, it is included in your NFP.
And if you spent the gift or inheritance and can't show where the money went, you can't ask for the property to be excluded from your NFP.
Other property
Other property that is also "excluded" from your NFP includes:
- money that you got or have a right to get as a result of a personal injury, like a car accident
- money that you received from a life insurance company because someone died
Pension credits
The Canada Pension Plan (CPP) is a type of pension that most workers and employers contribute to. You earn CPP credits as you work. When you retire or can’t work because of a disability, you can apply to get pension payments.
CPP credits you earned during your marriage are also "excluded" property that is not part of the NFP calculation.
Instead, you or your partner can apply directly to Service Canada to divide CPP contributions that were made during the time both of you lived together. You must have lived with your partner for at least one year to qualify. This is why CPP credits aren't included in NFP and the equalization payment.
There are also special rules about how to value and divide other types of pensions. For example, your employer might have a pension plan that you contribute to.
Use financial statement forms
Form 13.1: Financial Statement (Property and Support Claims) can help you with any special rules that apply in your case. For example, in the form:
- "Part 6: Property, debts and other liabilities on date of marriage" explains that you should not include the value of a matrimonial home on the date of marriage.
- "Part 7: Excluded property" explains that you should list all excluded property such as gifts or inheritances.
- "Part 9: Calculation of net family property" explains how to subtract the total value of any excluded property listed in Part 7.
3. Calculate each partner's net family property
Use the information in your financial statement to calculate your net family property (NFP). NFP tells you how much money you are worth at the end of your relationship after taking into account what you brought into the marriage.
To calculate your NFP, you first add together all assets and subtract all debts that you had at the end of your relationship or your separation. This is usually on the day you and your partner separated. Then you also subtract all assets less all debts you had on the day you married.
Remember that some assets or debts are treated differently in this calculation. For example, some gifts and inheritances are not included.
There are instructions on the Form 13.1: Financial Statement (Property and Support Claims) that tell you what items to add and subtract.
Your partner calculates their NFP the same way.
Example calculation of NFP for each partner
Married partner A |
|
---|---|
Now (Separation Date) = assets - debts |
$100,000 |
Then (Marriage Date) = assets - debts |
$20,000 |
Now - Then |
$80,000 |
NFP for Married partner A is $80,000 |
Married partner B |
|
---|---|
Now (Separation Date) = assets - debts |
$55,000 |
Then (Marriage Date) = assets - debts |
$25,000 |
Now - Then |
$30,000 |
NFP for Married partner B is $30,000 |
If your NFP calculation is a negative amount, your NFP is considered to be zero.
4. Calculate the equalization payment
The married partner with the higher net family property (NFP) owes the other partner half of the difference between the NFPs. This is the equalization payment.
Example
Married partner A's NFP = $80,000
Married partner B's NFP = $30,000
Married partner A's NFP - Married partner B's NFP = $50,000
$50,000 divided in half = $25,000
Equalization Payment: Married partner A pays $25,000 to Married partner B
You can use Form 13B: Net Family Property Statement to compare your NFP and your partner's NFP. This makes it easier to calculate the equalization payment. Form 13B uses the information from your Form 13.1: Financial Statement (Property and Support Claims).
Dividing property unequally
Sometimes married partners divide property unequally. This is called an "unequal division of net family property".
Courts rarely make an order to divide property unequally. You have to show the judge why an equal division of net family properties is "unconscionable". This means that dividing property equally is more than just unfair, it must "shock the conscience of the court". This is difficult to prove in court.
Here are some examples of when this might happen:
- One partner doesn't tell the other partner about debts they had on the date of marriage.
- One partner has debts that were incurred recklessly or in bad faith. For example, this may be debts from secret gambling.
- The amount of the equalization payment is large and the marriage lasted for less than five years.
- Both partners agreed on how to divide property but didn't sign a domestic contract. For example, both partners exchanged emails that showed how they agreed to divide property but never officially signed an agreement.
5. Make an agreement or apply to court
If you and your partner agree, you can make a separation agreement that says how you divide your property and debts. This usually says who pays the other an equalization payment.
The law also allows you and your partner to make a separation agreement that divides things in a different way than through an equalization payment. You can even agree not to divide property and debts at all.
But most people use the equalization payment at least as a guide when deciding how to divide property because that is what they usually have the right to under Ontario law. So they look at this first before deciding if they want to agree to divide their property differently.
If you and your partner can't agree, you can ask a family law professional to help you resolve your issues. Or, you can go to court and ask a judge to decide.
Choose the right court
There are 3 courts that deal with family law issues in Ontario. These are the:
- Ontario Court of Justice
- Superior Court of Justice
- Family Court branch of the Superior Court of Justice
It is important that you go to the right court. You have to start your case in a court that:
- Deals with the family law issues you need to resolve. For example, the Ontario Court of Justice doesn't deal with divorces or dividing property, so you would have to go to either the Superior Court of Justice or Family Court branch of the Superior Court of Justice.
- Is in the municipality closest to where you or your partner live. But, if your issues include child support, custody, or access, you should go to the court in the municipality where your child lived before you and your partner separated.
If you're not sure which court to go to, call the family courthouse (link is external) in your municipality to ask.
Time limit
The time limit to make a claim in court for an equalization payment is 6 years after you and your partner separate or 2 years after you divorce, whichever happens first.
Sometimes a court gives you more time. But you have to explain why you needed more time to ask for an equalization payment.
Marriage contract
If you signed a marriage contract or a cohabitation agreement but one of you no longer wants to follow it, that person may ask the court for an order to set aside the agreement. This means the court allows them not to follow all or part of the agreement.
But the other person can ask the court to make an order that divides your property in the way you agreed to in your agreement.
The courts encourage people to decide their issues on their own. So if you have an agreement, the courts won’t set aside your agreement easily.