Freezing Assets Before Equalization: Preservation Orders Ontario

If you think your spouse may sell property, empty an account or move money out of reach, it is natural to want it frozen. That worry is common during separation, especially when large assets or a business are involved.

This article explains what people usually mean by freezing assets, why timing matters, and what to gather before you speak with a lawyer. It does not set out the full rules for particular court orders, which depend on the facts and should be confirmed with a lawyer.

What freezing assets means

People use "freezing assets" to describe steps meant to stop property from being sold or moved while a family dispute is unresolved. The specific court orders and tools available, and what each one does, depend on the facts, so it is worth confirming with a lawyer.

These steps matter because an equalization payment can be worth little if the paying spouse has no assets left. The default rule is that the spouse with the lesser net family property is entitled to one-half the difference between the two net family properties. Protecting property helps make that entitlement real.

The tests for each order, and the evidence a judge expects, are specific, so ask a lawyer which tool applies to your situation.

What you can and cannot count on

Net family property is the value of all property a spouse owns on the valuation date, except excluded property, less debts and liabilities. Who can deal with a particular asset in the meantime depends on how it is held and on any court order or agreement, so a lawyer can confirm your position.

• Joint accounts: money placed in a joint account can still keep its excluded character if the spouse rebuts the presumption of joint ownership with evidence.
• Traced property: property into which gift or inheritance money can be traced can also stay excluded, other than a matrimonial home.
• Gifts and inheritances: property acquired by gift or inheritance from a third person after the date of marriage is excluded from net family property, but the exclusion does not apply to a matrimonial home.
• Matrimonial home: it is property in which a person has an interest and which both spouses ordinarily occupied as their family residence at separation.

What is excluded affects how much needs protecting. A spouse worried about assets should know which items are likely part of the calculation and which are not.

Real estate and the risk of a forced sale

Concern about property often involves a home or other real estate. Joint tenants have a prima facie right to force a sale under s. 2 of the Partition Act. The party resisting sale has the onus to show it should not happen.

So if you jointly own real estate, you may face a request for sale, and your spouse may need to protect their own interest too. This is one reason people talk to a lawyer early about how a property is held and what steps are available.

Domestic contracts can change the picture

If you and your spouse signed a marriage contract or cohabitation agreement, it may affect what is included in the calculation. Property the spouses agreed in a domestic contract is not to be included is excluded from net family property.

Setting aside a domestic contract is a two-step process. First, the applicant must show one of the s. 56(4) circumstances is engaged, for example that a party did not understand the nature or consequences of the contract. That is necessary but not sufficient, because the court then decides whether to exercise its discretion to set the contract or a provision aside, and fairness is an appropriate consideration.

What to do next

• Write down the assets you are worried about and where they are held.
• Collect recent statements, deeds, corporate records and any signs of unusual transfers.
• Keep a dated record of any statements or actions that raise your concern.
• Do not move or spend joint money in ways that could be criticized later.
• Speak with a family lawyer promptly, because the options depend on the asset and the stage of your case.

If you can, ask your spouse to agree in writing not to sell or move key assets. A written agreement can sometimes achieve the same goal without a contested court hearing.

Frequently asked questions