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Division of Assets and Property

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Division of Assets and Property

Canadian Laws Governing Family Property And Division

Family Property is governed by the Part I of the Family Law Act, RSO, 1990, c F3, (the “Act“) which is a Provincial Statute that only applies to Ontario.

That does not necessarily mean that a spouse who is present in another province cannot benefit from that Act. It depends on where the divorce is initiated or more specifically, according to section 15 of the Act, the place where both spouses had their last common habitual residence.

In order to be efficient, it is highly recommended that spouses agree on the division of their assets through negotiation which culminates in a “separation agreement”. If spouses can agree to a division through a “marriage contract”, that is usually the best and quickest way to avoid conflict upon divorce. Although, if there are material changes in the circumstances of the spouses, from the moment they signed the marriage contract compared to the separation date, a marriage contract may not exactly be the best option. You may read more about the difference between a separation agreement and a domestic contract in our blog which outlines the various types of domestic contracts here. Such complicated matters must be dealt with the advice of a divorce lawyer. We ensure that your rights are not violated and that you get what you deserve, under the Law. Canadian laws, in our opinion, are very fair. In order to benefit from them however, you must apply for them and prove your case with evidence. Lawyers will help you achieve that. Most clients who attempt to proceed to Family court without legal representation often make legal mistakes and miss out on some very protective legal rights. Instead fixing the problem after committing many legal mistakes, our law firm advises that you get the process right from the start and hire a divorce lawyer at the outset.

 

How Assets Are Divided Under Canadian Divorce Laws

Every spouse is entitled to the “Equalization of Net Family Property”. Unless, of course, a legally valid Marriage Contract or Separation Agreement provides otherwise; which is why, by the way, it is highly recommended that you have family and divorce lawyers properly draft, review and advise you on your domestic contracts prior to signing.

Equalization of Net Family Property means, according to section 5(1) of the Act, that the spouse who has a lesser net family property upon separation, is entitled to one-half of the difference between their net family property and their spouse’s.

A common misconception is that spouses will divide all of their common assets equally upon divorce. That is incorrect and certainly an oversimplification of the law governing the division of assets upon a divorce.

A Net Family Property, according to section 4(1) of the Act, is the value of all property owned by ONE spouse on the date of the Separation, minus that spouse’s debts and liabilities and the value of their property on the date of the marriage.

In other words:

Net Family Property of ONE spouse = Value of Property Owned by them on Date of Separation – Their Debts & Liabilities – Value of Property Owned by them on the Date of Marriage.

The Net Equalization of Property essentially means the comparison between both spouses’ net family properties, and the division in half of the difference between the two. The spouse with the lesser net family property, receives that half. In other words, the law does not divide all of the assets of the spouses in half, it rather shares the GROWTH of one spouse’s net worth throughout the marriageĀ with the spouse who “grew less” during the marriage. This is a very important difference.

Determining the date of the separation may be somewhat of an issue, as in certain cases, some spouses separate and later reconcile, only to separate again, multiple times in an “on and off” situation. We will help you determine the correct legal separation date if that is your case as there are laws governing these situations.

Property means, according to section 4(1) of the Act, any interest that a person may have. By inference, that includes cars, businesses, investments, bank accounts, real estate, personal property etc. There are MANY exceptions to what property is included in the calculation of a spouse’s net family property. The rules governing these exceptions are extensive which is why they will be omitted in this article. Consult a family law firm to determine your exclusions. Call 647 806 9184 or Email contact@ranacharif.ca to book a consultation with a divorce lawyer.

 

 

Date:

December 4, 2021

Category:

Family

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