When a marriage ends, the equal contribution of each person to the marriage is recognized. The law provides that the value of any kind of property that was acquired by a spouse during the marriage and still exists at separation must be divided equally between the spouses. Also, any increase in the value of property owned by a spouse at the date of marriage must be shared. The payment that may be owed to one of the spouses in order to effect this sharing is called an equalization payment, or an equalization of net family property.
A long-term romantic partnership can take several forms. If you are in one, and it’s working well, then the differences between the various types may seem irrelevant. But if that relationship ends, the legal distinctions can suddenly become quite important.
When couples separate, the way they have to divide their property depends on whether they were legally married or in a common-law relationship. The reason why a couple decides to separate does not affect how they divide their property.
Common Law Relationship – Living together in a marriage-like relationship without getting married is often called “living common-law” or “cohabitation”. In Ontario, there’s no formal or legal step you have to take to start a common-law relationship. A common law marriage is one in which the couple lives together for a period of time and holds themselves out to friends, family and the community as “being married,” but without ever going through a formal ceremony or getting a marriage license.
A common law relationship, on the other hand, has no division of property regime. If a person wants to make a claim for property in a common law relationship, they must make a trust argument. These arguments are more difficult to make out, and can become very time consuming and expensive to litigate.
Legal Marriage – In many jurisdictions, getting married requires being wed by an ordained minister or other person who has recognized authority to carry out a legal marriage. This can be done either in a religious setting or in a non-denominational or secular setting such as a city hall or courthouse. For married spouses, presenting proof of their relationship consists mostly of presenting a marriage certificate and photographs of the wedding ceremony.
A marriage like relationship is proven if you and your spouse can prove some or all of the following factors:
People buy homes for different reasons. However, almost always, the need to buy one’s own home is felt as soon as one ties the knot or decides to go in the family way before that, rented accommodation works just fine. Before we proceed further it would be crucial to note here that that law acknowledges a property to belong to the person on whose name it is registered. Any contributions made during the purchase by any other party, cash or kind, are not recognized, legally speaking, unless you have enough proof to prove otherwise.
The Ontario Family Law Act provides that any assets that a spouse inherits or receives as a gift from a third party during the marriage are excluded from the calculation of the individual’s net family property, provided these assets have been kept separate and exist on the date of separation. An exception to this rule is the matrimonial home, which cannot be excluded from the calculation.
Across Canada, each province and territory has slightly different laws for handling the division of property. But here’s the gist: under Canada’s constitution, a marriage is an equal partnership. It makes no difference if you’re responsible for running the household, earning the family income, or a blend of both your contributions are considered equal. While it varies from province to province, this sentiment is echoed throughout the division of property.
When you are separating or getting divorced in Ontario, the property that you acquired during your marriage must be divided equally. The law in Ontario ensures that married spouses are required to equally divide all of the property a couple acquired during their marriage.
This is where equalization comes in. The person with the highest NFP owes their soon-to-be-ex half of the difference between their two figures. The difference is your equalization payment. For example, if one partner has an NFP of $100,000 and the other partner has an NFP of $30,000, then the difference is $70,000. The partner with the higher NFP then pays a $35,000 equalization payment to the other.
Canada Pension Plan (CPP) credits are a special category of property. Once you and your spouse are separated, and if you meet other basic requirements, you or your spouse can fill in a form to ask the CPP to divide equally the CPP credits you both earned while you were married. The Quebec Pension Plan (QPP) also allows you to split your pension credits.
The division of property in a divorce can be quite complicated and the more assets a couple has the more complex the laws can seem. Due to the complex nature of divorce and property laws, we always recommend that couples seek legal advice from a lawyer in their area who specializes in family law. This is the best way to ensure that you are fully educated, and that your rights and property are protected.
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