Upon separation, spouses may receive a special “equalization payment”,
based upon an equal division of their wealth acquired during the marriage.
When calculating the division of property, such items as inheritances,
life insurance proceeds and some other items received during the marriage
are excluded. In very general terms, the payment owed from one spouse
to the other is calculated as follows:
- The net value of your property at the date of separation, less the net
value of your property at the date of marriage, becomes your ‘net
family property’. - The spouse with the higher ‘net family property’ pays the other
spouse one-half the difference between the two. This amount is called
an “equalization payment”. - The value of the home, if owned at the time of marriage and separation,does
not affect this equalization payment.
The details of the above calculations are somewhat complex; essentially,
the value of your property at the date of separation is compared with
that of your spouse. ‘Property’ for these purposes consists
of RRSP’s, pensions, shareholdings, and other items of value. Deducted
from your and your spouses property value are all debts, including contingent
liabilities (such as the cost of disposing of assets) and any tax liabilities.Similarly,the
value of all property owned on the date of marriage, after deducting liabilities (other than a matrimonial home owned on that date) is deducted from your and your spouses subtotal. The final balance becomes
“net family property.”
The spouse with the higher net family property pays the spouse with the
lower net family property one-half of the difference.
Note that the matrimonial home is neither included in the ‘excluded
property’ list, nor is it deducted from net family property if it
was owned at the date of marriage. A number of exceptions to the above
rules exist and relate to the types of property that may be excluded or
must be included in the above calculations.
Consulting a lawyer experienced in family law is critical, to ensure that
your rights are protected in any division of property.