Pre-Marriage Assets and the Date of Marriage Deduction in Ontario

Many people bring a house, savings, a business or debts into a marriage. When the marriage ends, they want to know whether those things stay protected. In Ontario the answer is partly yes, but there are important limits.

This article walks through how the date-of-marriage deduction works, where the matrimonial home exception applies and what records help prove your starting position.

How the deduction works

Net family property is the value of all property 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) the spouse owned on the date of marriage.

The Ontario government describes the steps this way: add up your property at separation, subtract your debts and excluded property, subtract your net property value on the date of marriage, then divide the difference between the two spouses' totals by two. The spouse with the larger total pays.

In plain words, the deduction generally means that what you already had is not shared, so only the increase in value during the marriage is shared. The exception is a property that is a matrimonial home on the valuation date, where no deduction is allowed and the full value is included. Values are calculated as of close of business on the valuation date or the date of marriage.

A simple illustration

Suppose, as an example only, that your investments were worth less on the date of marriage than they are on the valuation date, and you had no debts. The deduction removes the starting value, so only the growth during the marriage counts. This example is only meant to show the mechanics, not to predict an outcome.

The matrimonial home exception

The deduction is not allowed for property that is a matrimonial home on the valuation date. The home's full value is included even if one spouse owned it before the marriage. This surprises many people who bought a house before the wedding and then lived in it as a couple.

A matrimonial home is a property in which a person has an interest and that is, or was at separation, ordinarily occupied by the person and their spouse as their family residence. A couple can have more than one, and a rental property the couple did not live in as a family residence does not qualify.

Condo and co-op owners are included: owning shares that entitle you to occupy a unit is deemed an interest in that unit. Also, a marriage contract can exclude the home's value from net family property.

Debts and proof

Debts reduce net family property. Lines of credit, loans and mortgages on the valuation date are deducted. If a spouse's net family property comes out below zero, it is treated as zero.

If you had debts at the date of marriage and did not disclose them, that can be one of the factors a court considers when deciding whether equalizing would be unconscionable. A court may depart from half only if equalizing would be unconscionable, which the Ontario government describes as very special situations.

The person claiming a deduction has to prove it. Without records from around the wedding date, a valid claim can be hard to establish.

• Bank, investment and retirement statements closest to the date of marriage.
• A mortgage statement and a recent appraisal or assessment for any real estate.
• Loan, credit card and line of credit statements.
• Business records for any company owned at that time.

What to do next

In court, a party making a property claim must serve and file a financial statement in Form 13.1, and later a net family property statement in Form 13B. Start collecting your date-of-marriage records early, because old statements can take time to request.

Also check whether you signed a marriage contract. A domestic contract that deals with a matter also dealt with in the Act generally prevails. Unmarried partners are in a different position: there is no equalization for them, and property generally belongs to whoever bought it.

• Write down your date of marriage and your date of separation.
• Request statements for every account as of the wedding date.
• List what you owned and owed then, with proof.
• Identify every property that was a family residence.
• Have a family lawyer review your numbers before you exchange financial statements.

Frequently asked questions