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What is “equalization” and how is it calculated?

Equalization is the process whereby the courts divide the difference between the net family properties of the separating or divorcing spouses and award one-half of that difference to the spouse who has the lower net family property. The rationale behind this is that a marriage is a partnership during which time each spouse contributes equally to child care and household responsibilities. As a result, upon marriage breakdown each should be in a financially equal position.

Equalization Calculation

Determine the valuation date. (i.e. the triggering event. See: ss.4(1), 5(1)-(3))
Determine all assets owned by both spouses on valuation date.
Account for any exclusions. (See: s. 4(2))
Determine all debts and liabilities of both spouses on valuation date.
Deduct the debts and liabilities from the assets owned.
Repeat step 2 for all assets owned on marriage date.
Repeat step 4 for all debts and liabilities on marriage date
Deduct the debts and liabilities from the assets owned.
Subtract the marriage date total from the valuation date total to determine each spouse’s net family property.

Sample of Equalization Calculation

Marriage Day

Husband - Total $320,000

Owned a home worth $400,000
Had a savings account with a balance of $5,000
($75,000 mortgage)
($10,000 student loan)

Wife - Total $17,000
$20,000 stock portfolio
($3,000 student loan)

Valuation Day
Husband - Total $380,000
Matrimonial home (worth $750,000) owned jointly with wife = $375,000
$10,000 savings
$5,000 joint bank account with wife
($10,000 credit card debt)
Wife - Total $442,000
Matrimonial home (worth $750,000) owned jointly with husband= $375,000
$5,000 joint bank account with husband
$50,000 stock portfolio
$15,000 in dividends from father’s shares (silent on income therefore it is included pursuant to s. 4(2)2
($3,000 credit card debt)

Net Family Property
Husband - $60,000 Wife - $425,000 Once the net family properties of each spouse are determined then pursuant to s. 5(1) the courts may equalize the amounts.
Equalization of net family properties Divorce, etc. 5. (1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.
Therefore, using the example above equalization would result in the following:
the wife has a net family property of $425,000
the husband has a net family property of $60,000
therefore, the husband, who has a lower net family property, is entitled to one-half the difference between the two amounts

$425,000 - $60,000 = $365,000
$365,000 ÷ 2 = $182,500

The wife must pay the husband $182,500.

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