Property Claims In A Separation or Divorce: The Real Facts
What are the property claims for married spouses in a separation or divorce in Ontario?
You thought getting separated or divorced could be tough.
One of the most difficult issues in a separation is the issues of property claims.
When you get separated in Ontario and you are married, you are entitled to make a property claim called equalization of net family properties. That’s certainly a mouth full.
What exactly does that mean? It means a married spouse is entitled to one half the difference between their net worth and their spouse’s net worth when this spouse has a lower net worth. The whole purpose of this calculation is to make sure that each spouse has same net worth after their separation.
An example will get you a better idea of what I’m talking about.
Let’s say your husband has a net worth of $600,000 and you have a net worth of $200,000. This is how you calculate or determine equalization of net family properties in this example. You subtract or deduct the wife’s net worth of $200,000 from the husband’s net worth of $600,000 so that the result is a figure of $400,000. Then you divide $400,000 by two for a final result of $200,000. In this example, the husband must pay $200,000 to the wife.
When he pays this $200,00 to the wife, he will not have a net worth of $400,000 and she will have a net worth of $400,000. This payment of $200,000 is called an equalization payment because it makes sure that each spouse has the same net worth after their separation.
You can only make a claim for an equalization payment when you are married to your spouse. When you live in a common-law relationship, you can make what is called a constructive trust claim against property. However, that can be a difficult claim to prove.
You also face an important limit to make an equalization claim. You must bring your court application for an equalization payment within two years after your divorce or within six years after you and your spouse separated, whichever comes first.
How do you actually determine your net worth in the first place? You must determine the value of your assets and the amount of debts as of the date of separation. The fancy legal word for date of separation is the valuation date in Ontario family law.
In summary, the calculation of a married spouse’s net family property involves a four-step formula:
First, you must calculate the value of your property on the date of separation. Then you must deduct the amount of your debts on the date of separation from the total value of your assets on that date. You next deduct the value of your assets that you owned on your date of marriage from the previous total after you first deduct the value of your debts on the date of marriage. Finally, you can exclude the value of certain property from this calculation, such as gifts and inheritances.
You can quickly see how this whole issue of equalization of net family properties can overwhelm any married spouse.
You can’t afford to make any mistakes in this critical area of your separation or divorce.
Make sure you spend some time with your family lawyer discussing this important issue in your separation or divorce.
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?
Go here now to find out more: Durham Region Separation and Divorce Legal Support Group
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