(Brahm Siegel is a Toronto family law and divorce lawyer, mediator and arbitrator. He is here to answer your questions on all aspects of family law. Write to him at firstname.lastname@example.org)
Q: How is property divided after a marriage breakdown?
In Ontario and most other provinces, each party's assets and debts are valued as of two specific dates. The first is the date of marriage. The second is the "valuation date," which is usually the date of separation. We then calculate how much each spouse's net worth has increased from marriage to valuation date. The spouse whose net worth has increased more than the other must pay a sum of money to "equalize" their property. This payment is called an "equalization payment."
Q: When you refer to assets, you mean investments?
Assets include all property, including investments, real estate, accounts and pensions.
Q: So how come I always hear people talk about "getting half" from their spouse?
"Getting half" is not the way it works. Instead, a one-time payment is made in order to equalize the difference between the spouses' increases in their net worth from marriage to separation. That is very different from halving everything. Remember, we do not divide up each asset. There is only one payment made. The assets and debts are totaled up at separation for each side at separation and at marriage and a calculation is performed to determine the equalization payment.
Q: I'm still a bit confused. Can you give me a quick example?
Let's say at marriage my client's worth $1,000,000. At separation, two years later, he's worth $1,100,000. His increase in his net worth is $100,000. Let's say my client's spouse is worth $50,000 at marriage and $60,000 at separation. Her increase is $10,000. The difference between the parties' net increases is $90,000 ($100,000 - $10,000). When that sum is divided by two, we get $45,000. Once that figure is deducted from my client's increase and added to his spouse's we get $55,000. They are now equalized. The $45,000 payment is the equalization payment.
Q: I notice you say "in Ontario". Are things different in other provinces?
Yes. Property is, by definition in our constitution, something which falls under provincial jurisdiction, so there are some differences across provinces. A person should never rely on legal advice from a lawyer (or worse, their own research on the Internet) outside their province, unless the lawyer is well-qualified to advise on the property law of that province.
Q: How different?
In some provinces, very. British Columbia's system is quite different than Ontario's. In BC, assets are treated as either "family assets" or "business assets," after which the court has a broad discretion to re-distribute property if not doing so would create a situation of "unfairness," having regard to six different criteria:
• The needs of each spouse in becoming economically independent
• The length of the marriage
• How long the parties have been separated
• The date the property was acquired
• Whether any property was gifted to or inherited by the spouse
• A catch-all clause including any other related circumstance relating to the property
Q: Is there anything else I need to know about this equalization payment?
Certain assets are excluded or exempt from the equalization calculations. We will talk more about this in a future column. Until then, happy lawyering!
(Have a question about family law? Ask Brahm at email@example.com)