DIVISION OF PROPERTY

In Ontario, the division of property in family law refers to the legal process of distributing assets and debts between spouses when a marriage or common-law relationship ends.

The law looks upon a spousal relationship as a financial partnership. When a marriage ends, the law assumes equal contribution of each person to the marriage. The law requires spouses to equally divide the value of any property they acquire during the marriage. This division must occur if the property still exists at separation. Both spouses must share any increase in the value of the property owned by either spouse at the date of marriage. The payment one spouse may owe the other to equally share asset value is called an “equalization payment".

The Family Law Act (FLA) governs the process of property division for married couples, operating on the principle of equalization

Anything the spouses own is subject to equalization. That includes real estate, savings, investments, RRSPs, pension plans, cars, boats, and machinery. It also covers business interests, valuables like jewellery, art, and antiques, and even air miles.

There are some exceptions to this rule. These exceptions might include gifts or inheritances received during the marriage from someone other than a spouse. You can exclude gifts or inheritances from equalization if you did not use them to purchase a matrimonial home.

These automatic property sharing provisions apply only to married couples.

Common-law partners must have a cohabitation agreement or prove significant property contributions to claim asset division, unlike married couples who automatically share property.

Assets typically remain with the person who owns them, and joint property is divided based on ownership or contributions. Both married and common-law spouses must fully disclose all assets and debts. This process, often called a "financial disclosure" - can involve negotiation, mediation, or court intervention if disputes arise.

If you are ending a common law relationship, you may be entitled to a payment from your spouse. This payment is to pay you back for a direct or indirect contribution to property that he or she owns. These claims are referred to as “unjust enrichment claims” or “trust claims”.