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Before making important decisions regarding family law, you should consult with a member of our legal team in order to understand your legal rights and obligations.

Breakdown of the Marriage & Division of Property in Family Law

The courts in Ontario treat marriages as a form of partnership. As such, following separation and on the request of one of the parties, the court will assess the overall increases in the value of property accrued by the parties during a marriage and provide a balancing payment to one of the parties. In general terms, on separation, each spouse calculates his or her ‘net family property’ by deducting the value of his or her net asset position (being assets minus debts) as at the date of marriage from the value of the spouse’s net asset position as at the date of separation. The spouse with the greater net asset position will be required to pay one half of the difference to the spouse that has the lower net asset position. The payment that is made from one spouse to the other spouse is referred to as an ‘equalization payment.’

There are notable exceptions to these rules, which are known as excluded property. Excluded property is property that does not have to be included in a spouse’s net family property and the value of which is therefore not included in a determination of the equalization payment. For example, excluded property includes gifts or inheritances that are received during the marriage from a third party, so long as that money was not used towards the matrimonial home and was not inextricably co-mingled with the other spouse’s assets.

In addition, a court has the power to award a spouse an amount that is more or less than half the difference between the parties’ net family properties dependent on whether an equalization would be considered “unconscionable” under s. 5(6) of the Divorce Act.

Cohabitation/Common Law Relationships & Division of Property

The division of property for married couples (both opposite sex and same sex) is governed by the Family Law Act in a process called the equalization of net family property. This process, however, does not apply to non-married couples who are cohabiting (also known as living in a common law relationship). People living in these types of relationships are not legally required to divide their property and are not entitled to any equalization of their net family property. In these situations, property is usually determined in accordance with title or ownership, meaning that property belongs to the party that purchased it. This applies to all property and can even include the home where the parties reside. That being said, there are exceptions to this, known as equitable trust remedies. These remedies are complex and will only apply in rare and very specific circumstances.  If you are unmarried and are considering a trust claim, these issues should be canvassed with an experienced family law lawyer.