Is equalization the same as splitting our assets in half in Ontario?
No — equalization and a 50/50 split of assets are very different, and confusing them is one of the most common misconceptions in family law. Ontario's system does not require every asset to be divided. Instead, each spouse keeps their own property. What gets equalized is the difference in the growth of each spouse's wealth during the marriage.
For example, if one spouse's net family property is $300,000 and the other's is $100,000, the difference is $200,000. The higher-NFP spouse pays the other $100,000 as an equalization payment. Neither spouse's individual assets are automatically split — the spouses decide between themselves (or a court decides) how that $100,000 payment is made: cash, transfer of an asset, RRSP rollover, etc.
The result can look similar to a 50/50 split when both spouses entered the marriage with nothing, but the mechanics and outcomes differ significantly when there are pre-marriage assets, inheritances, or excluded property.
Key takeaways
- Equalization balances the growth in each spouse's wealth — it does not divide every asset
- Each spouse typically keeps their own assets and a payment adjusts the imbalance
- The higher-NFP spouse pays the lower-NFP spouse half the difference
- Outcomes differ significantly from a 50/50 split when exclusions or pre-marriage assets exist