How To Tell Whether Your Spouse Has A Real Property Claim Against You in Your Separation or Divorce!

How To Tell Whether Your Spouse Has A Real Property Claim Against You in Your Separation or Divorce!

In a previous video, we discussed an example of how to calculate the value of your net family property.

In this video, we will continue our discussion with a look at the spouse’s net family property and the actual determination of an equalization payment in this example.

Hi, my name is Thomas O’Malley.  I’m an experienced family lawyer in Durham Region and the GTA.

Now, you have to look at the calculation of the net family property of John’s wife, Susan. 

Susan’s total assets on date of separation, the valuation date, are her one-half interest in the matrimonial home ($75,000), her small pension (valuated at $10,000), and one RRSP ($5,000). 

Her total assets on the valuation date are worth $90,000.

Susan’s total debts and liabilities on the valuation date are her portion of the mortgage ($55,000), her credit card debt ($7,500) and her small loan ($2,000).  Her total debts on the valuation date is $64,500.

Susan owned assets worth $3,000 on the date of marriage.  Her debts on the date of marriage was $500.  Therefore, the value of her property on the date of marriage after deducting her debts and liabilities on the debt of marriage is $2,500. 

Susan has no property to exclude under section 4(2) of the Ontario Family Law Act from the calculation of her net family property.

How do you specifically calculate Susan’s net family property?  Her total assets on the valuation date are worth $90,000.  You have to deduct $64,500, Susan’s total debts on the valuation date, from $90,000, which equals $25,500. 

Then, you deduct $2,500, the value of her property on the date of marriage after deducting her debts and liabilities on the date of marriage, from $25,500, which equals $23,300.  Susan has no exclusion of any property from her net family property calculation.

Susan’s net family property, therefore, amounts to $23,300.

When you have calculated John’s net family property and John’s net family property, you now figure out whether John or Susan owes his or her spouse an equalization payment.

How do you calculate the equalization payment in this example?  The legal formula is that the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.  John’s net family property is $75,500 and Susan’s net family property is $23,300.  Therefore, John will owe an equalization payment to Susan since his net family property is higher than Susan’s net family property. 

The actual amount of the equalization payment is calculated as follows: deduct Susan’s net family property from John’s net family property and divide by 2. 

Therefore, deduct $23,300, Susan’s net family property, from $75,500, John’s net family property, which equals $52,200. 

Then divide $52,200 by 2, which equals $26,100.  The equalization payment is $26,100.  John must pay this equalization payment of $26,100 to Susan.   

You can now see the importance of full financial disclosure so that you can calculate your net family property and your spouse’s net family property.  You can only figure out whether you will receive an equalization payment or whether you have to pay an equalization payment to your spouse by accurately completing your financial statement and getting your spouse’s financial statement.

Getting full financial disclosure from your spouse can never be emphasized too much.  You will never know about what the proper equalization payment is without full financial disclosure.

Make sure you spend some time with your family lawyer discussing this important issue in your separation or divorce.

If you have any questions about your separation, divorce or family law case and you would like our help, there’s a few ways to contact our office.  You can leave a message on my Facebook law office page, visit my website at www.canadiandivorcelegaladvice.com, or call me directly at 905-434-8837.  We would be happy to speak to you.

Oh, by the way, did you know you can protect your family law rights and get essential information on settling your family law issues with your former spouse with the daily indispensable family law advice and tips at my FREE Facebook group?

Click here for more information: Durham Region Separation and Divorce Legal Support Group  

Thanks for watching this video.