What is an unequal division of net family property?

The division of net family property and establishing how much money each spouse is legally entitled to upon the dissolution of a marriage is referred to as the “equalization of net family property.”

According to the Family Law Act, the formula in determining one's net family property requires a calculation of one's net asset position on the date of marriage and on the date of separation. The basic parameter upon which the “equalization of net family property” is established as follows:

The first step is to calculate each party's net asset position on the date of separation. It is then necessary to subtract any legally permitted exclusions. Legally permitted exclusions may include but are not limited to, inheritances, specific kinds of gifts, as well as items that both individuals have agreed to keep excluded from the division of property.

It is then necessary to calculate each party's net worth at the date of his or her marriage.

The net worth of each spouse the day that they got married is then subtracted from each of their net worth on the date of the separation.

Finally, the party with the higher net family property pays the party with the lower net family property one-half of the difference between their respective net family properties.

The above-noted scheme outlines the basic formula upon which an equalization payment is determined in Ontario. There are times, however, when other factors may affect the equalization of the net family property.

The legal system takes into consideration situations whereby equal division of the net family property would be unfair given particular circumstances. The threshold required in order to establish an unequal division of net family property is a high one. Specifically, if an equal division is unconscionable, an unequal division may be ordered by the Ontario Courts. With that being said, there are situations whereby Ontario Courts will grant one spouse an amount that is more or less than half the difference between the net family property.

These circumstances include but are not limited to:

1. When a spouse neglects to inform the other spouse of debts or other liabilities that existed at the date of the marriage;
2. When a spouse incurs debt recklessly;
3. When a spouse intentionally depletes his or her net family property;
4. When there is some form of written agreement between the parties that outlines another agreement when it comes to the way in which they intended on dividing their net family property; or,
5. When the amount of money one spouse is considered legally entitled to is disproportionately large compared to the years that they have lived together.

Call 905.707.3370 to book a consultation with one of our lawyers to discuss your specific situation and to canvass whether or not your case may be a candidate for an unequal division of net family property.