Do Increases in Value After Separation Count in Equalization in Ontario?

After a separation, a house can rise in value, a business can grow and an investment account can swing either way. Many people ask whether that later change is shared.

The Ontario calculation is anchored to a specific date, and understanding that date is the key. The details for a business or investment can depend on the facts, so a lawyer or accountant can help you check your own situation.

The valuation date anchors the calculation

Net family property is the value of property a spouse owns on the valuation date, less excluded property, debts and date-of-marriage property. Values are calculated as of close of business on the valuation date or the date of marriage.

The valuation date is the earliest of these: separation with no reasonable prospect of resuming cohabitation; the date a divorce is granted; the date the marriage is declared a nullity; the date a spouse starts an improvident-depletion application that is later granted; or the day before a spouse dies.

Because each asset is measured on that date, growth or loss that happens afterwards is generally not part of the calculation. The result then is one-half the difference between the two net family properties, paid as money.

Different assets, same date

How a business, stock options or crypto-assets are valued, including how to treat tax and unvested interests, varies by case and often needs professional evidence. Using the valuation date means the question is usually what the asset was worth then, not what it is worth now.

Why the date can still be disputed

Spouses do not always agree on when they separated. The valuation date depends on separation with no reasonable prospect of resuming cohabitation, so the date itself can be argued, and a different date can mean a different value. Records such as statements closest to that date are useful, and in court the statement issued closest to the valuation date for each financial account must be provided in a Part I property claim.

If documents you served turn out to be incorrect, you must correct or update them. The party claiming a deduction or exclusion has to prove it.

Protecting property while the claim is open

Because equalization is a money payment based on a past date, some people worry the other spouse will spend or move assets in the meantime. The court can make preservation orders in an equalization application, such as restraining dealings with property or requiring security. It can also restrain the depletion of a spouse's property that would impair or defeat a claim.

On a payment order, the court can order security, including a charge on property, and can order instalments or delay of payment for up to ten years if needed to avoid hardship. Where spouses are still living together, a spouse may apply to have net family properties equalized as if separated if there is serious danger of improvident depletion.

What to do next

• Write down the date you believe is the valuation date and why.
• Collect statements, appraisals and balance sheets from as close to that date as possible.
• Keep separate records of anything that changed after that date.
• Note the time limit: an application cannot be brought after the earliest of two years after a divorce, six years after separation, or six months after the first spouse's death.
• Ask a lawyer about protective orders if you fear assets will be spent or transferred.
• Ask an accountant or valuator about businesses and complex investments.

Frequently asked questions