- Net family property is the value of everything a spouse owns on the valuation date, less debts, except property that is specifically excluded.
- Property acquired by gift or inheritance from a third person after the date of marriage is excluded, but that exclusion does not reach a matrimonial home.
- Where windfall money goes after you receive it, such as a joint account or the family home, can change how it is treated.
- The default is that the spouse with the lesser net family property receives one-half of the difference, and a court departs from that only if equalizing would be unconscionable.
A lottery win, a large gift, a settlement or an unexpected payout can arrive at any point in a relationship. When the relationship ends, the first question is usually whether the money has to be shared with your spouse or whether it is yours alone.
The answer depends on what kind of money it is, how you handled it, and what is left on the valuation date. This article explains the main rules Ontario courts work with, so you can see which questions matter and what to raise with a lawyer.
How equalization starts: net family property
Equalization is not a division of each item you own. Each spouse's net family property is calculated, and then the difference is shared. Net family property is the value of all property a spouse owns on the valuation date, except property that is excluded under section 4(2) of the Family Law Act, less debts and liabilities.
The spouse with the lesser net family property is entitled to one-half of the difference between the two figures. This is the default rule. So the first practical question about a windfall is whether it falls into one of the excluded categories. If it does not, the money or whatever it was turned into is generally part of what is counted, to the extent you still own it on the valuation date.
Is a lottery win a gift?
Many people assume that any lump of money that falls into their lap is theirs alone. The law does not work from that assumption. One of the best-known exclusions covers property acquired by gift or inheritance from a third person after the date of marriage. The key words are from a third person. Whether a lottery prize fits that wording depends on the facts, so it is worth confirming with a lawyer.
Because this depends on the facts, do not assume a win is excluded, and do not assume it is automatically shared either. If someone close to you gave you a share of a prize, or gave you money as a present, that is a different situation from a ticket you bought yourself. A lawyer can tell you how the exclusions apply to your particular money.
Where the money went matters
Even when money is excluded at the start, what you do with it can change the result. Excluded property includes property into which excluded gift or inheritance money can be traced, other than a matrimonial home. In one Court of Appeal for Ontario decision, traced funds in an investment account stayed excluded.
Putting excluded money into a joint bank account did not, by itself, make it lose its excluded character in that same decision. The spouse was able to rebut the presumption of joint ownership with evidence. The court treated that differently from money put into a matrimonial home.
The matrimonial home is a special case. The gift and inheritance exclusion does not apply to a matrimonial home, and the tracing exclusion also carves out a matrimonial home. A matrimonial home is property in which a person has an interest and which the person and spouse ordinarily occupied as their family residence at separation. Using windfall money to pay down a mortgage or renovate the family home is therefore something to raise with a lawyer before you act.
| What happened to the money | General effect |
|---|---|
| Kept in an account in your own name | Depends on whether it qualifies as excluded property; keep clear records |
| Deposited into a joint account | Not lost as excluded property by that step alone, but you may need evidence to rebut joint ownership |
| Invested and still traceable | Traceable excluded property other than a matrimonial home stays excluded |
| Put into the matrimonial home | The exclusions do not apply to a matrimonial home |
Agreements, fairness and unequal sharing
Spouses can agree in a domestic contract, such as a marriage contract, that certain property is not to be included. Property they have agreed is not to be included is excluded from net family property. If you have such an agreement, read it closely, because it may cover windfalls.
Courts can vary the equal share only if equalizing net family properties would be unconscionable. The threshold is high, and mere unfairness is not enough. In one decision, a court upheld a 10% payment after a short cohabitation, but that result was fact-specific and is not a formula.
- Do not rely on feeling that the money is yours because you won it.
- Do not assume a short marriage automatically means a small share.
- Do not assume a court will adjust the numbers simply because the result seems unfair.
What to do next
If you have received a windfall, or your spouse has, the most useful step is to document it before the details blur. Then speak to a family lawyer before moving the money, especially if the home is involved.
- Record the date you received the money and where it was first deposited.
- Keep bank and investment statements showing where it went afterward.
- Note whether anyone gave it to you as a gift, and get that in writing if you can.
- Find any marriage contract or cohabitation agreement and check for wording on excluded property.
- List what you owned and owed at the date of marriage and what you own and owe now.
- Ask a lawyer how the exclusions apply before you put the money into the family home.
Frequently asked questions
Is lottery money automatically excluded from equalization?
No, you cannot assume that. The well-known exclusion covers gifts and inheritances from a third person after the date of marriage, and whether a prize fits depends on the facts. A lawyer can review your situation.
Does a joint account make my gift or inheritance shared?
Not by itself. In one Court of Appeal decision, depositing such money into a joint account did not make it lose its excluded character, but the spouse had to rebut the presumption of joint ownership with evidence.
What if I used the money for the matrimonial home?
The gift and inheritance exclusion does not apply to a matrimonial home, and the tracing exclusion also leaves out a matrimonial home. Money put into the home was treated differently from money in a joint account.
Can a court split things unequally because the money was mine?
Only if equalizing would be unconscionable, which is a high threshold that mere unfairness does not meet. Whether the money is excluded is a separate question from that.
Sources
- Cortina v. Cortina, 2015 ONCA 750 (Court of Appeal for Ontario) — ontariocourts.ca
- Knight v. Knight-Kerr, 2021 ONCA 686 (Court of Appeal for Ontario) — ontariocourts.ca
- Booth v. Bilek, 2021 ONCA 128 (Court of Appeal for Ontario) — ontariocourts.ca
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