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Among couples that undergo a divorce or separation, the division of property varies case to case. While some couples may decide on an equal 50/50 division of property, others may create a more customized structure that works best for their unique circumstances.
When an agreement cannot be reached privately, separating or divorcing couples may proceed through mediation arrangements or go to court. Our family lawyers at Gelman & Associates may be able to help you understand and determine to what assets you may be entitled. Contact us today to schedule a consultation.
What is Family Property?
When a marriage dissolves, both spouses become entitled the equalization of family property that has accumulated over the course of their marriage. In this regard, property may include:
- Land
- Family home and furniture
- Stocks
- Pensions
- Bank accounts
- Vehicles
- Businesses
- Real estate
- And more
The first step in the equalization process is to calculate the net family property (NFP) of each spouse. This is a monetary value appointed to both parties based on the balance of total assets and liabilities they have accumulated throughout their marriage. All assets and all debts acquired during the marriage are included in the calculation of NFPs except for gifts or inheritances acquired after the date of the marriage.
Your lawyers will use your date of marriage along with the valuation date to determine your NFP value. The valuation date refers to the date on which you and your spouse separated, with no reasonable prospect of resuming cohabitation. If the parties cannot agree on the date, the court may decide for them based on witness testimony, the couple’s public status, the nature of their separation, and other factors.
What Is an Equalization Payment?
Equalization payments may be issued in order to establish a more equitable situation between two divorcing parties. Our Ontario family lawyers may be able to determine the value of your equalization payment through the following steps:
- Calculate the NFP for each individual
- Calculate the difference between the spouse with the higher NFP value and the spouse with the lower NFP value
- Divide that difference in half – this constitutes the equalization payment value
- The spouse with the higher NFP value then pays the equalization payment to the spouse with the lower NFP value
If a couple cannot determine an appropriate equalization payment amongst themselves, the court may decide on their behalf. If this is the case in your divorce, the division of net family property may be a 50/50 split based on your specific circumstances, though this is not always guaranteed. For more information, contact our Ontario family lawyers at Gelman & Associates.
Calculating the Equalization Payment: How do Assets Get Divided?
Once the equalization payment is determined, the parties determine how it will be satisfied, which may involve the transfer of assets, or it may simply be a monetary payment. While a 50/50 division of property is possible as part of the equalization payment, it is not the only option. According to Ontario’s Family Law Act, the general rule for the division of property is that the spouse with a smaller NFP is entitled to one half of the difference between the two parties.
Additional factors, such as the existence of a prenuptial agreement or marriage contract could also outline how the division will occur. In this case, a division of property can be decided before the marriage begins in accordance to the spouses’ wishes, and may not necessarily be 50/50. Without a prenuptial agreement, spouses are also free to choose how to divide their property, as long as they both consent and incorporate those decisions into a separation agreement.
In some situations, couples may have an uncontested divorce and come to a mutual agreement about how to handle aspects of their split. But if you and your spouse cannot agree, then the equalization of property may be a possible option.
What Happens to Debt in a Divorce?
Your net family property value is calculated by subtracting your debts from the value of your assets. Under the Ontario Family Law Act, debts are not divided in the same way as assets. Spouses do not share the responsibility for each other’s individual debts that were acquired before or during marriage, unless they have specifically co-signed onto joint debts together. Debt stays with whomever is legally responsible for it, and they can then claim it as a deduction to their NFP.
Any debts that have been shared jointly between spouses during a marriage will be split equally. Any debts or legal obligations you owed individually before marriage will typically stay with you alone. Joint debt that may be eligible for equalization includes credit card debt, outstanding mortgage values, car loans, and so on.
In rare cases, the court may decide against an equal split of debt if the debt was incurred through one party’s negligence. To learn more, contact our Ontario family lawyers at Gelman & Associates.
In the Case of Unconscionability
Sometimes, a court may award an unequal amount if the equal division of net family properties may be considered unconscionable. There are a few situations in which this may occur, including if a party intentionally lowered their NFP, if their NFP consists of gifts, or if they failed to disclose all debts or liabilities.
The test for unconscionability is incredibly high. But if proven, some courts may award an uneven division of assets. If you think you may be entitled to an uneven division, contact a family lawyer to help you navigate the nuances of this situation.
Contact Gelman & Associates Today for a Consultation on 50/50 Asset and Property Splits During a Divorce or Separation
Our Ontario family lawyers at Gelman & Associates are available to help navigate the potential complexities of net family property calculations and equalization payments. We may be able to help you divide your property in a private, amicable manner, or take your divorce to court should collaboration not be possible.
If you are interested in learning more about how your property may be divided and how a family lawyer might help settle your divorce, contact us today to schedule a consultation.
Disclaimer: For specific legal advice on your family law matter, please consult with a family law lawyer. The content in this article is not intended to act as legal advice and is instead intended to act as a general overview of a legal topic.
