What Is Equalization and How Does It Work in Ontario?

Equalization is a payment of money between married spouses, not a split of each asset. When a divorce is granted, a marriage is declared a nullity, or spouses separate with no reasonable prospect of resuming cohabitation, the spouse with the lower net family property is entitled to one-half the difference between the two net family properties.

Net family property is the value of what a spouse owns on the valuation date, minus excluded property, minus debts and other liabilities, and minus the net value of property (other than a matrimonial home) owned on the date of marriage. The spouse with the larger total pays the equalization payment. The idea behind it is that child care, household management and financial provision are joint responsibilities, and each spouse contributes equally, whether financially or otherwise.

Some property, such as most gifts and inheritances received after the date of marriage (other than a matrimonial home), is excluded. A domestic contract such as a marriage contract generally prevails over the Act's rules. How these rules apply depends on your facts, so a lawyer can confirm your position.