Asset and Property Division
One of the primary goals upon separation is to achieve a fair division of property and assets. Under the Family Law Act (Ontario), married spouses are subject to a property division regime called "Equalization of Net Family Property". Unmarried or common-law spouses are not subject to the automatic equalization regime of the Family Law Act and are required to make out their property claims on a different basis.
Our lawyers know that each family’s financial situation is unique. The expertise and depth of knowledge in financial matters at Epstein Cole allows us to explore tailored solutions to help secure a successful financial future for our clients, whether through litigation or other methods of dispute resolution. Our team can skillfully navigate any level of financial complexity.
Equalization of Net Family Property
Under the Family Law Act, on a breakdown of marriage, the cumulative net worth acquired during the marriage must be equalized as between the spouses. The process of equalizing of the parties' net family property is meant to ensure that spouses are fairly compensated for their contributions to the marriage regardless of legal ownership. If one spouse has accumulated more net family property during the marriage than the other, then that spouse will owe an "equalization payment" to the other to compensate.
Determining the values of assets and liabilities as at the date of marriage and as at the date of separation, which is the date when one or both partners decide to end the marriage or relationship, is the starting point. Other considerations relate to the source of certain assets received during marriage, as being gifts from third parties, inheritances, certain lawsuit proceeds, and insurance proceeds, which assets may be considered differently in the equalization process. Common law and married spouses may also have trust claims against each other in addition to the equalization of net family property.
Financial situations can become more complicated when a couple’s financial portfolio includes complex assets, such as investment properties, pensions, retirement accounts, stock options, trust interests, corporate assets and other more complicated financial assets. We understand what information is needed to value these assets and the particular tax considerations that accompany such assets.
When common-law spouses separate and seek to divide their assets, they are not governed by the same automatic property regime as married spouses. They are not automatically subject to the equalization of net family property. In certain cases, common-law spouses may have to make "trust claims" for a share of the other's property on the basis of unjust enrichment or based on the contributions to the acquisition, preservation or maintenance of a property.
Financial Disclosure and Investigation
Whether a couple applies to the court to resolve financial matters or seeks to settle matters through negotiation, the law requires full and complete financial disclosure by both spouses. For the equalization of net family property, both sides must disclose the value of all assets and debts at the date of marriage and the date of separation, and sometimes valuing assets and debts is not as simple as it may seem. Where there is misrepresentation of financial information or concealing of assets, more in-depth investigation is necessary. Agreements that are based on misrepresentation of financial information may be voidable by the courts. Agreements based on proper disclosure are more difficult to set aside.