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The answers set out below are intended only to provide general information. Every person's situation is unique and most often there are more matters to consider than what is set out in the individual questions. As well, if you live outside of Ontario your provincial or territorial legislation will be different from that inside Ontario. In every case, whether you live in or out of Ontario, you should consult an experienced family law lawyer fully informed about your circumstances and not act solely on the information set out here.

If you have a particular question not dealt with below you can send an e-mail enquiry and we'll be sure to get back to you shortly.

Who owns the property in our marriage?

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Subject to certain qualifications, each person owns the property in his or her name. Where something is bought which doesn't involve title documents, the item will be regarded as owned by the person who paid for it. If you got the thing as a gift, even though you didn't pay for it, it's yours. If it was bought from a joint bank account or on the understanding that it's "ours", then it's owned by you and your spouse jointly.

Sometimes something may be bought with one spouse's money and put into the name of the other spouse but the court will conclude that it is really owned jointly by the parties or by the person who paid for it. This happens when the non-titled spouse claims an interest because of a trust. The law dealing with trusts (there are constructive trusts, remedial constructive trusts and resulting trusts) has become quite complex as it relates to dealing with property acquired during the marriage. However this approach has been used by the courts to give property rights to non-married spouses which they would not otherwise have.

The courts have also assisted non-married spouses by applying the principles of unjust enrichment to try to remedy a situation where one person will end up with a benefit to which they may be entitled in law but not in fairness. In these cases the courts can look to what is referred to as the principles of equity.

Generally speaking you start with the proposition that what's yours is yours and what's mine is mine. But there may well be other factors which apply. Because this can get technical, contact a knowledgeable family law lawyer if there is any doubt in your mind about your circumstances.

How does family property, or matrimonial property, get divided?

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Each province and territory deals with the division of property upon separation and divorce differently and you should consult with a family law lawyer in your jurisdiction. To get an idea of how this is dealt with in British Columbia, click here. If you are in Ontario, continue reading.

In Ontario the Family Law Act governs how people deal with property upon separation and divorce. In a nutshell, property is left in the hands of the owner and not dealt with directly. But an equalization payment is ordered.

What is an "equalization payment"?

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When spouses in Ontario separate there is no division of property - but there is a calculation made to determine how much money the person whose net asset value has increased most during the marriage should pay to the other so that they each end up with assets of equal value for the period of their marriage. This payment is called an equalization payment.

How is the equalization payment calculated?

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Basically an economic snapshot is taken of the value of the assets owned by each party on the date of the marriage and on the date of their separation (the "valuation date"). Everything is counted and valued as at each of those two dates: the then current value of your records and books, furniture, car, bank debt, student loans, etc., etc. The values are what the items were worth on each of those two dates.

If you married in 1986 and owned a 1982 Ford, a stamp collection, a three year old TV and a couch when you got married, then the question is what was the value of each of those items on your marriage date in 1986. If any of these were still owned at your separation in, for example, 1995, then you set out the 1995 value for each item you still have on the date of separation (the valuation date). The Ford and TV are probably gone by separation date and the couch may have been purchased for $900 but by 1995 was worth only $25 at a garage sale. But the stamp collection which may have been worth $300 at the date of your marriage may now be worth $1,000. As a result you would enter the couch at $25 and the stamp collection at $1,000 for the valuation (separation) date values.

Once you have the values of the things you brought into the marriage (less any debts) you subtract that from the value of the things you owned at separation date, unless you got them during marriage as a gift or inheritance (after subtracting your valuation date debts) and end up with your Net Family Property (NFP). Do the same with your spouse's assets and debts to figure out his or her NFP. Then you deduct the lower NFP from the higher one and divide the difference in half. That figure is the amount of the equalization payment because, once it is paid by the richer to the poorer party they will each end up having assets of the same value. (One might still have more assets than the other because of the reasons mentioned next.)

This is complicated by the fact that there are certain things which aren't included in the calculations. The value at separation date of any inheritance or gift received by a party after marriage is excluded from his or her NFP. If you inherited $10,000 from your great aunt a few years before separating and spent it on a vacation or paid off the mortgage, none of it is left at separation and there is nothing to value or exclude. But if you put that money into a separate bank account, bought a painting or invested in stocks with it you could then value the bank account, painting or stocks as at the date of separation and would be able to exclude that amount. Sometimes the amount of the exclusion is greater than the value of the gift or inheritance when you got it because it has gone up in value in the meantime. There are other exclusions to keep in mind and special rules setting out when you can or cannot deduct the value of the matrimonial home in your name. Because of the importance these deductions and exclusions will have on figuring out any equalization payment, make sure you contact a knowledgeable family law lawyer to be clear about your rights and entitlements.

What is a "matrimonial home" and does it get any special treatment?

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Under the Ontario Family Law Act a matrimonial home is every property in which a person has an interest and that was ordinarily occupied by the person and his or her spouse as their family residence at the time of their separation. Ther can be more than one matrimonial home: a summer cottage, ski chalet, condo in Florida or time share unit used for vacations, etc. The matrimonial home in Ontario qualifies for special treatment in two ways.

Firstly, regardless as to whose name it is in, both spouses have equal rights to the possession of the matrimonial home. That right continues until the parties are no longer spouses or until there is a court order or agreement providing otherwise. No one can "throw out" the other spouse just because the "thrower" owns the house.

Secondly, if a home is a matrimonial home at the date of separation and was the same home lived in at the date of marriage (perhaps it was owned by one of the parties and the other moved in before or at marriage or it was purchased to be the new family's first home by one of the parties) then the owner cannot deduct its marriage date value when calculating his or her Net Family Property. It's valuation date value is included as a valuation date asset but without any corresponding deduction. This situation doesn't come up often, but when it does it can have a huge impact.

What about pensions?

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Pensions are property and must be valued when calculating your NFP and the equalization payment. But they are difficult to value and require the help of an actuary. Generally you can assume that the pension you or your spouse have is worth a lot more than you think. It is certainly worth more than the value of the contributions made to it. Its value also changes depending upon how much longer the pension member will be working, whether there will be early retirement or not, if the pension is one which is indexed and whether the calculation should be made as if the pension member was terminated at the valuation date or will continue to work and participate in the plan to normal retirement.

Some pensions are governed by federal legislation and others by provincial and territorial legislation. Each of the pension plans has its own special set of terms and provisions. Some of the Pension Administrators are very helpful in dealing with parties who are separating and others are not. Different rights will apply if you are separated at the time the pension becomes payable or not. Maybe the pension member began contributing to the plan years before the marriage - how should the new spouse figure out his or her interest? What happens if the pension plan member remarries after separating but before retirement - or enters into a common law relationship? And so on and so on.

The question of how properly to deal with pensions is a very serious one with great significance to separating parties. But surprisingly there is still much uncertainty about how to deal with them. The ideal situation would be for the pension to be divided by the pension plan itself when the parties separate, but this is not easy to do as the values of pensions are calculated on the lives of the pension plan members and not on their spouses. There is provision for dividing pensions under federal jurisdiction but not yet for those under the jurisdiction of Ontario or most of the other provinces and territories.

There are clearly times when the two main things of major value owned by the parties are the family home and the pension. While the home can be lived in or can be sold to raise money, the pension can't be. If it is valued and made part of an equalization payment there may not be money around to make the payment.

All of these are matters of concern. The two key things to remember are that wherever there is a pension, it needs to be dealt with and that you are best advised to see a lawyer to find out what it means for you. Often the lawyer will need to hire an actuary to be able to give you meaningful advice.

Click here to submit any questions you may have about an equalization payment in Ontario.

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