Dividing Property After Separation in Ontario: Assets and Debts

When a relationship ends, one of the first worries is what happens to the house, the savings, the cars and the debts. In Ontario the answer depends heavily on whether you were married or living together without marrying.

This article explains the basic approach for married spouses, what is left out of the calculation, how common-law couples are treated, and the steps people usually take next. It is general information, not advice on your situation.

The basic idea: equalization, not a pile-by-pile split

Ontario does not usually divide each item between spouses. Instead, each spouse works out the value of what they own less what they owe, and the two totals are compared. The spouse whose total is smaller is entitled to one-half of the difference between the two.

That payment is called an equalization payment. It evens out the growth in wealth that each spouse built up during the marriage, whoever's name was on the account or title. The detailed arithmetic is covered in our article on net family property.

The values are fixed as of the valuation date. The first of several possible dates is the day the spouses separate with no reasonable prospect that they will live together again.

Assets and debts both count

Your net family property is the value of the property you own on the valuation date, after deducting your debts and other liabilities. Credit cards, car loans and the remaining mortgage all reduce it.

Two dates matter. Property you owned at separation is valued as of the day you separated, and property you owned on your wedding day is valued as of the date of marriage. Debts you had at marriage are subtracted from the property you owned then, except debts tied to the family home, such as a mortgage.

• Assets: the property you own on the valuation date counts toward your net family property, so it helps to list everything you own.
• Typical debts: credit cards, lines of credit, car loans and mortgages.
• Gather statements showing balances as close as you can to the separation date and the marriage date.

What can change the result

Some property is not included in net family property. This covers property acquired during the marriage by gift or inheritance from a third person, personal-injury damages, and property the spouses agreed in a domestic contract to exclude. The exclusion does not apply to a matrimonial home.

That last point is important. The full value of the family home must be shared even if one spouse owned it before the marriage or received it as a gift or inheritance, unless the spouses agree otherwise.

A court may also award more or less than half the difference if equalizing would be unconscionable. One factor it considers is a spouse's intentional or reckless depletion of their net family property. Where needed to protect the other spouse's property interests, a court may make an interim or final preservation order restraining the depletion of property and providing for its possession, safekeeping and preservation.

If you are not married

Common-law couples are not legally required to split property acquired while living together, and items generally belong to whoever bought them. A partner who contributed to the other's property may need to go to court to recover that contribution.

The word spouse is used differently in different places. For property division, the Family Law Act's general definition covers only people who are married to each other or who entered a void or voidable marriage. For support claims, the definition also covers unmarried people who have cohabited continuously for at least three years, or who are in a relationship of some permanence and are the parents of a child. Because of this, the date your cohabitation ended can matter.

Deadlines and what to do next

An application for equalization cannot be brought after the earliest of three dates: two years after the marriage ends by divorce or judgment of nullity, six years after the spouses separate with no reasonable prospect of resuming cohabitation, or six months after the first spouse's death. A court may extend a Family Law Act time limit on a motion if there are apparent grounds for relief, the delay was in good faith, and no one will suffer substantial prejudice. Do not count on that, and act early.

• Write down your separation date and your wedding date.
• Collect statements for accounts, investments, pensions, loans and cards.
• Note any gifts, inheritances or contracts that may affect what is included.
• Get any agreement in writing; a separation agreement is unenforceable unless it is written, signed and witnessed.
• Disclose everything honestly; a court may set aside an agreement if significant assets or debts were not disclosed.
• Ask a lawyer how the rules apply to your property, especially for businesses, pensions or a home.

For general information, Family Law Information Centres across Ontario are free and offer information and referral coordinators and duty counsel provided by Legal Aid Ontario.

Frequently asked questions