- Net family property is based on property owned on the valuation date, less debts and liabilities, except excluded property.
- Timing around the valuation date can affect whether money is counted, so exact dates matter.
- The spouse with the lesser net family property is entitled to one-half of the difference.
- Variation of the equal share requires that equalizing be unconscionable, and mere unfairness is not enough.
A layoff, a negotiated exit package or a year-end bonus around the time of separation can leave both spouses asking the same question: does this money count? The answer often turns on dates, on what was actually owned, and on what the paperwork says.
This article explains how the equalization rules generally apply to severance and bonuses. It does not replace advice, because the type of payment, its timing and its terms all affect the result.
Start with the valuation date
Net family property is the value of all property a spouse owns on the valuation date, except excluded property, less debts and liabilities. So the first question is what you owned on that date.
Money already received and sitting in an account on the valuation date is property you own. A payment that has not been received, or that has not yet become something you are entitled to, raises harder questions. Whether and how it counts depends on its terms and the facts, and a lawyer can confirm.
How timing can change the picture
Because the measuring point is a single date, the order of events matters. Compare these common situations.
| Situation | What to think about |
|---|---|
| Severance paid and in the bank on the valuation date | It is property owned on that date and is generally part of net family property unless excluded |
| Severance spent before the valuation date | What it was spent on matters; property bought with it may be counted, and debts paid may reduce liabilities |
| Bonus promised but unpaid at the valuation date | Depends on whether there was an entitlement then; get advice with the offer or contract in hand |
| Payment arrives well after the valuation date | Depends on the facts and the terms of the entitlement; a lawyer can advise |
Do not rush to move or spend money because of these timing issues. Large unexplained transactions near separation tend to draw questions, and advice before acting is safer.
Exclusions, deductions and mixing funds
Severance and bonuses are earnings or termination payments, not gifts or inheritances, so the gift-and-inheritance exclusion in s. 4(2) will not usually apply to them. The exclusion that does matter is where you have a domestic contract that says certain property is not to be included.
Another point is where the money goes. Depositing excluded funds into a joint account did not by itself make them lose their excluded character in one Court of Appeal case, though the spouse had to rebut the presumption of joint ownership with evidence. That case dealt with gift or inheritance money, not wages or severance, so do not assume it carries over to earnings.
If severance is used to pay down a mortgage on the matrimonial home, the home has its own rules. Excluded property put into a matrimonial home is treated differently from money in other assets. Because homes can be complicated, have a lawyer review it.
Property owned on the date of marriage, other than a matrimonial home, is also deducted. That is not typically relevant to a severance payment received during the marriage, but it can be relevant if a spouse brought savings in.
Payments, fairness and unconscionability
Once both net family properties are worked out, the spouse with the lesser figure is entitled to one-half of the difference. A spouse who receives a large payment shortly before separation may feel the result is unfair, and so may the other spouse.
The court can vary the equal share only if equalizing would be unconscionable. The threshold is high, and mere unfairness is not enough. In one case a 10% payment was upheld after a short cohabitation, but that was fact-specific and not a formula.
What to do next
- Write down the date you separated and the date you received or expect each payment
- Keep the termination letter, release, bonus plan and pay records
- Keep bank statements showing where the money was deposited and how it was used
- Avoid large transfers or spending without advice
- Ask a family lawyer how timing around your valuation date affects the figures
- Consider also asking an accountant about tax on the payment
Frequently asked questions
Is severance pay part of net family property?
Property a spouse owns on the valuation date, less debts, is included unless excluded. Severance already received and held on that date is generally property owned. Payments not yet received depend on the terms and the facts.
Does a bonus received after separation count?
It depends on the entitlement and the timing relative to the valuation date, since net family property looks at what is owned on that date. A lawyer who sees the bonus plan and dates can advise.
Can severance be excluded as a gift?
The exclusion applies to gifts and inheritances from a third person after the date of marriage. Severance is a payment connected to employment, so that exclusion would not normally fit. A domestic contract could still affect treatment.
Can a court change the split if the payment came just before we separated?
Only if equalizing net family properties would be unconscionable, which is a high threshold where mere unfairness is not enough. These cases depend heavily on their facts.
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
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a family law question
Start a file online — flat, published fees, reviewed by a licensed lawyer before a dollar is owed.