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When you get a divorce in Ontario, you and your spouse must go through the process of equalizing your net family property (NFP) according to the Family Law Act. Net family property represents the difference between each spouse’s total assets and liabilities accumulated during the marriage, excluding certain exemptions. Assets considered in this calculation may include:
- Real estate
- Vehicles
- Investments
- Pensions
- Liabilities
- And more
In addition to assets and liabilities located in Ontario, spouses must also include the value of any assets they own outside of Ontario or Canada itself. However, identifying, valuing, and accounting for foreign assets in the equalization process can be challenging. It is important that you understand your rights and obligations when it comes to foreign property during your divorce. Our family lawyers Evan Clemence and Paul Slan provide an overview of how out-of-province and out-of-country assets factor into equalization in Ontario.
At Gelman & Associates, our Toronto property division lawyers have years of experience helping spouses and families navigate the equalization of their net family property. Whether you require assistance calculating your NFP or understanding how foreign assets might impact your financial situation, we can help. To discuss your legal options, schedule a consultation with our lawyers today.
How Are Out-of-Province and Out-of-Country Assets Considered in Equalization?
All of your assets and liabilities, regardless of whether they are local or foreign, will be factored into your net family property. The same goes for your spouse. Ontario’s equalization process does not involve splitting or dividing individual assets between spouses. Instead, each spouse calculates their total net family property, which is determined by subtracting their liabilities from their total assets. The spouse with the higher NFP may then be required to make an equalization payment to the other spouse to establish an equal distribution of marital wealth.
For NFP and the equalization payment to be calculated accurately, the value of all foreign assets and liabilities must be disclosed in addition to those held in Ontario. How foreign assets may impact equalization will depend on the type of asset and the jurisdiction where it is located. Because of these complexities, consulting with an Ontario family lawyer is essential when dealing with foreign assets in a divorce.
Identifying and Valuing Out-of-Province and Out-of-Country Assets
The first step in determining how out-of-province or foreign assets factor into your equalization payment is identifying and valuing them. Ontario’s equalization process requires full financial disclosure, which includes all assets and liabilities within and outside of Canada. During a divorce, foreign assets that may need to be considered include:
- Real estate, including land, homes, and rental properties
- Bank accounts
- Investments, including stocks, bonds, and retirement accounts
- Businesses
- And any other financial holdings
To accurately calculate your net family property, each asset must be valued. Real estate will need to be appraised in the country of origin and converted into a Canadian dollar amount. You may need to collect bank statements for any international financial holdings. Business valuation reports for any foreign businesses you own may also be important to include.
Depending on the province, country, or countries where you own foreign assets, valuation and financial disclosure can be complicated. Certain countries may lack a standardized appraisal process. In addition, it might be difficult to obtain financial records or prove ownership. Despite these difficulties, full disclosure is still required by all parties participating in an Ontario divorce. An experienced family lawyer can help you ascertain the documentation you’ll need to collect and the steps you need to take to value your foreign assets.
The Importance of Full Disclosure of Foreign Assets
Despite the challenges you may encounter when identifying and valuing your foreign assets, it is important to remember full financial disclosure is required in Ontario divorces. Under the Family Law Act (FLA), both spouses must disclose all property, debts, and financial holdings inside and outside of the province.
To achieve full disclosure, you may need to provide:
- Bank statements for foreign accounts
- Title searches for foreign real estate
- Mortgage statements for properties with outstanding loans
- Business valuation reports
- And more
If you fail to fully disclose your foreign assets, there can be serious legal consequences. For example, the court in Ontario may overturn your divorce settlement. This normally happens when undisclosed assets and their value are discovered at a later date. In such cases, it may be found that your NFP, and subsequent equalization payment, were not calculated accurately at the time of divorce and must therefore be altered. In addition, failure to disclose is grounds for legal action under Section 56(4) of the FLA.
Are Out-of-Province or Out-of-Country Assets Involved in Your Divorce? Contact Our Family Lawyers at Gelman & Associates Today
When it comes to separation and divorce, the equalization process can be complicated. This is especially true in cases where you or your spouse own assets outside of the province or country. Whether you need advice about valuing your foreign assets, or you need help calculating your net family property, our legal team at Gelman & Associates can help.
To discuss your situation and legal options, schedule a consultation with our property division lawyers today. We can assist with property division in divorce involving out-of-province or out-of-country assets.
