Equalization

When you and your spouse separate and/or divorce it may be necessary that a division of property and equalization payment ensue. Therefore, an application may be brought under s. 7(1), against a spouse or his or her estate, to either the Superior Court of Justice or the unified Family Court for a determination regarding the equalization of net family properties pursuant to s.5(1).

After the occurrence of one of the events listed in s. 5(1)-(3) that essentially trigger a spouse’s entitlement to equalization, the applicant may bring a claim under this Act either:

  • two years after the day the marriage is terminated by divorce or judgment of nullity;
  • six years after the day the spouses separate and there is no reasonable prospect that they will resume cohabitation;
  • Six months after the first spouse’s death.

It is interesting to note that subsection (3) allows for an equalization payment to be made while the couple is still cohabiting:

Improvident depletion of spouse’s net family property
(3) When spouses are cohabiting, if there is a serious danger that one spouse may improvidently deplete his or her net family property, the other spouse may on an application under section 7 have the difference between the net family properties divided as if the spouses were separated and there were no reasonable prospect that they would resume cohabitation.

In 2001 the Ontario Court of Appeal affirmed an earlier decision explaining that the effect of s. 5(3) is that “where separation or death is certain, a spouse is under a duty not to deplete his or her net family property.

Section 5(3) enables a spouse in the face of such conduct to trigger the equalization mechanism.” However, it may not be necessary that separation, divorce, or death be imminent for a spouse to bring a claim under s. 5(3). An application may be brought under s. 7(1) based on s. 5(3) if the spouse is worried of the possibility of improvident depletion because the other spouse suffers from a loss of mental capacity or is engaging in reckless behavior (i.e. excessive gambling) and dissipating the family’s income and assets which is affecting their standard of living.

If necessary, the court may also make an order for preservation pursuant to s. 12 of the Act. This type of order essentially ensures that there are sufficient assets to make an equalization payment once it is ordered.

Orders for preservation
12. In an application under section 7 or 10, if the court considers it necessary for the protection of the other spouse’s interests under this Part, the court may make an interim or final order,
(a) restraining the depletion of a spouse’s property; and
(b) for the possession, delivering up, safekeeping and preservation of the property.

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