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When people go through a divorce, one of the most common questions is how their assets will be divided. The answer to this falls under the Family Law Act, and at times the answer can be confusing. 

When a couple gets a divorce, they must divide both their assets and their debts as well as subtract from the equation anything that isn’t joint property. Whichever spouse has their higher amount must pay their ex half the difference. 

How to finances get divided? 

Ontario divorce law works on the principle of “all things equal”. The goal is that both spouses are allotted an equal amount of whatever they earned together during the marriage. This is called net family property. (NFP)

The calculation involves combining all assets, and then subtracting all debts. The whatever assets each spouse had before the marriage are subtracted from the NFP and remain the property of the spouse who brought them into the marriage (the notable exception to this is the marital home). 

This means that your NFP and your spouse’s NFP will likely not be the same. 

So now equalization is needed. 

Whichever spouse has the higher NFP must calculate the difference between their NFP and their ex’s and then pay half that amount to their former spouse. This is called an equalization payment. 

How are debts divided? 

In a divorce, you only take with you, debts that are under your name. If you have a joint account with your spouse, then the debt accumulated is divided equally. This helps to protect both partners from financial abuse. 

What about our pensions?

Under Ontario divorce all, any pensions earned during the marriage are joint property and therefore must be included in the NFP calculation. Any amount of your pension that was earned prior to the marriage is subtracted from the NFP. You may need the assistance of your pension administrator to help you make this calculation. 

This is also true of your Canada Pension Plan benefits. Whatever amount was earned during the time of your marriage is split (you also must have lived together for a full year before the split takes effect) – anything earned prior is not included in the NFP. Service Canada can provide you with a CPP split application. 

Are there any assets that are not included in the division? 

If you received an inheritance either before or during your marriage, it won’t necessarily be included in your division of assets. You must however take very specific actions when you receive them to ensure they are not included in community property. 

You must be able to demonstrate that those gifts or funds still exist and that you did not mix those funds with your spouse’s or joint accounts. It is ideal if you can have money from an inheritance go into a separate bank account. 

If it goes into a joint account, it can be very difficult to prove the funds weren’t spent and you will likely lose the exclusion. 

Are there any exceptions to equalization? 

In most cases, the court will rule for true equalization. If there is a reason why you think equal division might not be fair, you will have to prove this to the court. One example might be if one spouse came into the marriage with extensive debt and did not disclose that to the other partner or if one spouse was secretly gambling during the marriage and lost a lot of the family property as a result. 

Contact Minhas Lawyers today

If you are going through a divorce, it is important that you work with a qualified family lawyer to ensure that your rights are protected – even if the divorce is amicable. To speak to a lawyer, contact us today to schedule a consultation. 


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