Dividing Property and the Matrimonial Home in an Ontario Separation Agreement

When a marriage ends, the biggest financial questions are usually the house, savings, pensions and debts. A separation agreement is where you and your spouse can write down how those things will be divided, so you both know where you stand.

This article explains, in general terms, how Ontario treats property for married spouses, why the matrimonial home is different, and what a property section of an agreement usually needs to deal with. Your facts will change the answer, so use this as a map rather than advice.

What the property part of an agreement does

A separation agreement is one type of domestic contract in Ontario, made under section 54 of the Family Law Act. Spouses can divide property any way they agree in it. That freedom is the point: you are not limited to a formula, but you also take on the risk of what you sign.

Ontario guidance says each spouse should have their own lawyer review the agreement before signing, and that it cannot easily be changed later. Separating spouses are generally recommended to have their own lawyers rather than share one.

How equalization works for married spouses

The default starting point for married spouses is equalization of net family property. Each spouse adds up the value of property owned on the separation date, minus debts and excluded property, then subtracts the value of property, minus debts, owned on the date of marriage. A negative result counts as zero.

The spouse with the larger net family property pays the other an equalization payment. Some property is excluded from the calculation, including gifts or inheritances from someone other than a spouse, personal injury damages, life insurance proceeds paid because someone died, and property excluded by a domestic contract.

Because the calculation depends on values, both spouses need accurate numbers. In Ontario family court, financial disclosure means giving the other party information and documents about income, expenses, assets and debts, and Form 13.1 is the financial statement used where property or debts are in issue.

The matrimonial home is treated differently

Spouses must share the full value of the family home even if one of them owned it before the marriage or received it as a gift or inheritance. It is divided equally unless the spouses agree to a different split.

That makes the home a key item to settle in writing. Your agreement can say whether one spouse keeps it and how the other is compensated, whether it is sold and how proceeds are split, or whether another arrangement applies. The details, including mortgages and timing, depend on your situation and are worth reviewing with a lawyer.

• Who keeps the home, or whether it will be sold
• How its value will be set and how any buyout is paid
• What happens to the mortgage and other debts on it
• Any different split the spouses choose to agree on instead of equal sharing

Pensions, CPP and common-law couples

Pensions need extra care. The Family Law Act values a spouse's interest in an Ontario pension plan using the imputed value set under the Pension Benefits Act, and Ontario guidance says to ask the pension administrator for information about the value. A domestic contract cannot entitle the eligible spouse to more than 50% of the imputed value of the member's pension.

To transfer a share of an Ontario pension, the application must include a certified copy of the domestic contract, arbitration award or court order. It must state the family law valuation date, the applicant's entitlement and the amount to be transferred. Retired members are an exception: an immediate lump-sum transfer is available only if the spouses are separated with no reasonable prospect of resuming cohabitation and no pension instalment was due on or before the family law valuation date.

Canada Pension Plan credits earned while you lived together can be split after a divorce or separation, and the split is permanent. An agreement generally cannot stop a CPP split in Ontario, because only agreements made before June 4, 1986, or certain agreements in other provinces can do that.

If you are not married, the rules differ. Ontario's equalization regime does not apply to unmarried couples, and household items and other property belong to the person who bought them. A partner who contributed to property the other owns may have a claim, and the separation agreement is where those claims are settled.

Time limits and what to do next

An equalization claim has a time limit: six years from the day of separation, or two years from the day the divorce is final, whichever comes first. A separate limb sets six months after the first spouse's death. The court keeps some discretion to extend time limits under the Family Law Act, but you should not count on that.

• Gather statements for bank accounts, investments, debts, the home and any pensions
• Note the date you married and the date you separated
• Ask each pension administrator for value information
• Complete financial statements so both sides work from the same numbers
• Have your own lawyer review the draft before you sign
• Sign in front of a witness so the agreement is enforceable

Frequently asked questions