The Division of Property & The Equalization Process in Ontario
According to the relevant legislation once parties separate there exists a property regime that assists those individuals in dividing their property. The way that this works is that each spouse’s net worth is calculated from the date of marriage to the date of separation. Essentially, the accumulation of net worth for each spouse is then compared and the difference between the two is equalized. What this means is that if one party has a higher net worth than the other party the difference between the two parties is divided between them. In lay terms, the party with the higher net worth will have to pay to the party with the lower net worth half of the difference between the two of them. However, it is important to note that one’s net worth is subject to any debts and liabilities that accrued during the same time period. Also important is that there are several common exclusions that are not included in the calculation including gifts, inheritances, and general damages for personal injury unless any were placed into the matrimonial home, for example, to pay down the mortgage or for renovations. On the other hand, if the gift or inheritance was invested elsewhere or was spent on other assets, so long as the funds can be successfully traced, the money can then be excluded. It is important to note that absent an order for the extension of time a claim for equalization cannot be brought after the earliest of six years after separation, two years after a divorce is granted, or six months after the first spouse’s death.