Free information about equalization of marital property in Canada
The law in Canada
about the division or equalization of family or marital property is governed
by each individual province. This summary only applies to the law in
Ontario and has been copied from a Ministry of the Attorney General's
Dividing your property in Ontario
The law says that
a husband and wife share responsibility for child care, household management
and earning income during their marriage. In the eyes of the law, a marriage
is an equal partnership. When a marriage ends, the partnership is over and
property has to be divided.
To recognize the
equal contribution of each person, the general rule is that the value of any
property that you acquired during your marriage and that you still have when
you separate must be divided equally, 50-50. Property that you brought with
you into your marriage is yours to keep if your marriage ends. Any increase
in the value of this property during your marriage must be shared.
There are some
exceptions to these rules. The law allows you to keep some property that you
have at the end of your marriage for yourself. This property is called
• gifts you
received during your marriage from someone other than your spouse;
• property that you inherited during your marriage;
• money that you received from an insurance company because someone died;
• money that you got or that you have a right to get as a result of a
personal injury, like a car accident.
The family home
is another exception to the general rules. The law says that when your
marriage ends, the full value of the family home must be shared even if one
of you owned the home before you were married, received it as a gift or
types of property, you do not get to keep for yourself what the house was
worth at the time of your marriage.
You and your
spouse can agree to a different split. Or, in some circumstances, you can
ask the court to divide things differently. The court can only divide
property differently in very special situations and if a 50-50 split would
be extremely unfair to one of you.
The legal rules
that you have to follow to calculate the value of your property and divide
it between you and your spouse can be complicated. It is a good idea to
consult a lawyer about how the rules apply in your case.
The next section
will give you an idea of how these rules work. Remember that this is only a
description of the general rules. There may be other rules and exceptions
that would apply to the facts in your case.
The first thing
that you and your spouse must do is to separately calculate the total value
of your share of the family property according to the rules set out in the
law. You must be fair and honest when you do this. If you go to court, you
must prepare a full financial report of all your property, debts and income.
You must swear that it is accurate.
You can calculate
your share of the family property using Steps 1-4 set out below:
Find out the value of the property you had on the day you separated
• Your property
is anything that is in your name or that belongs to you.
• You must list all your property, including property in other parts of the
country and the world. For example, your list of property might
include your home, a business, a car, furniture, a sound system, clothes,
sports equipment, jewellery, savings in bank accounts and retirement savings
plans, and your right to a pension, even if you will only get the pension
years from now.
• If you own some
property together in both names, you each put half the value of the property
on your list.
Step 2: Subtract the value of the debts you owed on the day that you
• Money owing on
credit cards, the amount left to pay on your house and a car loan are all
examples of debts.
• List them at their value on the day of separation.
Step 3: Subtract the value of property that the law allows you to keep for
• This property
includes gifts and inheritances received from someone other than your spouse
during your marriage, money received from an insurance company because
someone died, and money you got or have a right to get as a result of a
Step 4: Subtract the value of property that you brought into your marriage
less the value of debts
• Add up the
value of all the property that you owned when you married.
• Do not include your family home, even if you owned it on the date of your
• Subtract all the debts you had when you married.
The final step
will tell you if one of you owes the other any money.
Step 5: Find
out if a payment is owing
• Compare the
value of your share of the family property to the value of your spouse’s
• Subtract the smaller amount from the larger amount.
• Divide the difference by 2. This is the amount that the spouse with the
larger share must pay to the spouse with the smaller share.
• This payment is called an equalizing payment.
Note: If a person
has more debts than property, the value of his or her share of the family
property is zero.
For instance, if
you owed the bank $15,000 when you separated, and you have only $8,000 worth
of property, the value of your family property is $0 for the purposes of
calculating an equalizing payment.
calculations say I am entitled to a payment of $5,000. Do I get this in
necessarily. The payment can be paid in cash. It can also be made by giving
you property worth $5,000. Or, an amount could be put towards your rent or
mortgage every month until $5,000 is spent. How the payment will be made is
one of the things that you can arrange in your separation agreement. Or, it
is one of the things the court can decide.
Q We each went to
a lawyer and got some information and advice about how the law says our
family property should be divided. Now we’ve come to our own agreement about
things. Can our separation agreement divide things differently from the way
the law says?
A Yes. You are
free to divide your property any way you want in your separation agreement.
You should each have your own lawyer look over your separation agreement
before you sign it. You cannot easily change your separation agreement
Q I received a
car as a gift from my father. I know that the law says that if we separate,
I don’t have to share the value of gifts I received during our marriage. I
have decided to sell the car. Once I sell the car, is the money I get for it
part of the property I must share with my spouse if we decide to separate?
necessarily. If you keep the money separate, for example, in a savings bond,
so that you can always trace it to the sale of the car, it will be excluded
from the property you must share at the end of your marriage.
There is an
important exception to this general rule that affects the family home. If
you use the money from the sale of the car to pay down the mortgage on your
family home or to renovate it, you must share the full value of the family
home with your spouse if you separate. Once money is put into the family
home it must be shared, even if the money came from a gift or an inheritance
or other property that the law says you do not have to share with your
Q It’s my wife’s
fault our marriage is over. She started seeing another man and has decided
that she wants out. Why should I have to share the value of my property with
her now just so this new guy gets it?
A Your wife’s new
relationship has no effect on the division of property at the end of your
marriage. The law on dividing family property has nothing to do with why
your marriage has ended. The law sees a marriage as an equal partnership.
When it is over, the financial benefits of the partnership have to be
divided evenly and fairly. The calculations are made without looking at who
is at fault or who is to blame.
Q My husband has
been paying into company pension plans for 32 years. I stayed home to look
after the kids and now I am doing odd jobs for a little extra money. If we
separate, do I have a right to share his pension?
A Yes. In most
cases, a professional financial consultant or actuary will have to look at
your husband’s pension plan to establish its value. This amount is added to
your husband’s share of the family property. Or, you and your husband can
agree that when he starts receiving his pension, you will get a certain
percentage of it. You should see a lawyer to make sure the paperwork is done
soon as you separate, you are no longer recognized as a spouse under pension
law. For example, if your husband dies after you separate, but before you
reach any agreement, you do not have a right to a survivor’s benefit. You
should make sure that your agreement or court order is clear about your
rights to his pension.
Q Last summer, my
brother and I built an addition to my house. The addition cost $10,000 and
added $20,000 to the value of the house. Now my wife and I are splitting up.
Can I get the $20,000 back?
A No. You have
to share the full value of your family home with your wife. It doesn’t
matter if you put more money or work into your home. There are some very
limited exceptions to this rule.
Q My parents left
me their house when they died. I have been living in it for the last two
years with my boyfriend. We are planning to get married and raise a family
here. If our marriage doesn’t work out, I don’t want to lose the house to
him. In our marriage contract, can we say that the house is mine no matter
A Yes. Your
marriage contract can say that you own the house and that its value when you
married, and any increase in its value during your marriage, will be yours.
But, your husband will have the same right as you have to stay in the family
home if your marriage breaks down. You cannot put anything in your marriage
contract to change this.
If your marriage ends, your husband may be able to stay in the house until
you can agree to, or the court decides on, other arrangements.
Q We live on a
big dairy farm. Is the whole farm considered to be our family home?
A No. Your family
home is only the part of the farm where you live, the house and the small
area around it. The rest of the farm is property like any other property. It
is not covered by the special rules for family homes.
Q I’m so upset by
everything, I cannot cope with making lists of property right now. Do I have
to do this right away?
A You have six
years from the day you separated to go to court to ask for a decision on the
amount of the equalizing payment. If you get a divorce, you may have less
time. You would have six years from the day you separated, or two years from
the date your divorce is final, to go to court, whichever date comes first.
Q I am worried
that now that I’ve moved out, all our family property will disappear before
we have a chance to resolve things. I think my husband might get rid of it
just to keep me from sharing in its value. Is there anything I can do?
A Yes. You can go
to court and ask the court to stop your husband from giving away the
property. The court may tell him not to sell or dispose of the property or
it can order that it be put in someone else’s care to protect it.
Common law couples
Q We are not
married but we’ve been living together for 15 years. If we split up, do we
have to share the value of our property?
A Maybe. Only
married couples have an automatic legal right to half the value of family
property. You can ask your partner to pay you back for your contribution to
property that your partner owns. If your partner does not agree, you can go
to court to make your claim. But the claim will be based on another area of
law, not family law. Ask a lawyer for advice.