Division of Property and Assets – FAQs
Q: Who decides how to divide our property?
There are many people who can decide how to divide your property.
You and your spouse may decide how to divide your property and then incorporate it into an agreement. Your agreements may be arrived at either independently, with the help of lawyers or through mediation.
An arbitrator may decide how to divide your property based on either yours and your spouse’s wishes or based on the provisions found in the Family Law Act.
Or the court may decide how to divide your property if you and your spouse cannot reach an agreement through mediation or arbitration. The courts will defer to an agreement between the both of you or the court will enforce the provisions in the Act.
Q: How does division of assets differ for common-law couples?
For common-law couples, there is no entitlement to division of property and assets, as there is with married couples. Part 1 of the Family Law Act, which provides for the equal division of financial gains made during a marriage, applies only to married couples. This means that each common-law partner is entitled only to what he or she brought into the relationship or acquired during it.
The Supreme Court recently affirmed that the failure to extend property equalization regimes to unmarried, cohabiting spouses is constitutionally valid. Unmarried couples seeking such protections are free to marry or to form their own contracts providing for such division.
If you feel that you have contributed extensively to the value of a certain asset that belongs to your partner (a home in which you lived, or a pension or savings account, for example), and that it is therefore unjust for your spouse to retain the full value of that asset, you can make a claim for a constructive trust, to remedy unjust enrichment. A constructive trust gives the beneficiary a right to property in a particular asset, such as the matrimonial home. See the article Common-law Relationships and Division of Property for more details.
Litigation in this area can be difficult and complex. If you want to pursue this type of claim, you should consider retaining a lawyer experienced and knowledgeable in this area. Unjust enrichment claims are very fact specific, and an experienced lawyer will best be able to make the arguments necessary to support your claim.
See the article Common-law Separation for more information about the rights of common-law couples upon separation.
Q: Can I get more of the assets if my spouse cheated on me?
No. Conduct during the marriage and the reason for its dissolution are not relevant to the division of property. Canada has a “no fault” divorce system, meaning that the court will not consider conduct within the marriage when making decisions regarding separation, divorce, support, child custody and access, or any other matter arising from your relationship breakdown.
If your spouse acted unconscionably in regard to certain assets, for example, by lying deliberately, depleting assets before separation, or recklessly incurring debts (for example by gambling), or lying about debts or liabilities at the time of marriage, section 5(6) of the Family Law Act provides that the court has discretion to vary the equalization payment if equal division of assets would be unconscionable. That unconscionability, however, must relate to one of the specific examples listed in that section, or other circumstance “relating to the acquisition, disposition, preservation, maintenance or improvement of property.” Conduct not related to property, such as cheating, or even cruelty, do not entitle the other spouse to a larger share of the net family property.
Q: Do I have to go to court?
If you do go to court to have your property matters decided, the court will equalize your family property in accordance with the Family Law Act. Under s. 4(2), any property that the spouses specify in a domestic contract should be excluded from valuation date property, will be excluded. Otherwise, the court does not have discretion, except in exceptional circumstances, to deviate from the property equalization regime in accordance with your wishes.
There is no obligation for you and your spouse to go to court, or to divide your net family property as it would be divided under the Family Law Act. You are free to decide on the division of your property as you choose, and then incorporate your decisions into a separation agreement formalizing your arrangement. You can create your own separation agreement, or seek the help of lawyers. It is advisable that you get legal advice before finalizing any property sharing agreement, particularly if the marriage has been a lengthy one and you have built up considerable assets during that time.
Mediators can also help you arrive at an agreement, or an arbitrator can decide how to divide your property, either by applying the Family Law Act or based on your wishes.
See the article Going to Court versus Going to Trial – Clearing up the Confusion for more information on the difference between a trial and other court appearances.
Q: If my spouse is spending money recklessly from our joint account during separation, what remedy do I have?
Under the law, if you are married and are seeking an equalization of net family property, money in joint accounts is half yours, and your spouse is not allowed to spend your half of the money. If you think your spouse is spending your joint funds recklessly after separation, you have a couple of options as to how to deal with this issue.
The first is to wait. If you have a court date coming up in which the court will deal with the equalization of net family property, or if you and your lawyers or a mediator are in the process of negotiating an equalization of property, you should keep careful records of the balance of the joint account at the date of separation, your spending from that account, if any, and your spouse’s withdrawals. Then, when it comes time to equalize property, you can ensure that the court, or the lawyers or mediators, use the separation date balance to calculate the equalization payment.
In other words, if the balance of that account was $50,000 at the date of separation, then half of that would be considered yours for the purposes of all calculations. If your spouse has since spent $10,000, that does not affect the $25,000 that would still be counted as yours. Your spouse is essentially only spending their own money, and since the spending took place after separation, it will have no effect on the actual calculation of net family property.
However, if your spouse’s spending is depleting not only their half of the account, but also yours, or if you think their spending will interfere with their ability to pay you the equalization payment you will be entitled to, then you should act now.
If you have not yet sought equalization of net family property, you should do so immediately, and at the same time, apply to the court for a non-depletion order under s. 12 of the Family Law Act (FLA). Under that section, the court can order either that the spouse deliver up specific assets to the court for possession and safe-keeping, or that the spouse refrain from depleting assets. The purpose of this section is to ensure that there will be funds available to make any required equalization payment once it is ordered. The court will act under this section if it believes there is a real risk that the spouse’s spending will frustrate the equalization process.
If you have already applied to the court for equalization, you can also now apply under section 10 of the FLA for a determination of a question of title. In other words, you can ask the court to determine that you own the property your spouse is depleting. At the same time, you can apply for a non-depletion order under section 12, as indicated above. That way, if the court determines that you own funds your spouse is spending, it will simultaneously order your spouse to refrain from depleting them.
If you have not been able to prevent your spouse from depleting assets to which you are entitled, then when it comes time for the court to calculate equalization, you should apply under s. 5(6) of the FLA to vary the equalization payment to take into account your husband’s or your wife’s post-separation depletion of assets. If you can show to the court that under the equalization calculation you are being credited for having assets which in fact your spouse has since depleted, the court can order the spouse to repay your half of any assets that were depleted. The court can order a higher equalization payment to take into account the inappropriate spending that took place post separation, or, if you would owe your spouse money under the equalization process, the court can reduce or eliminate your need to pay your spouse, in order to compensate for the spending that took place.
Q: Is division of property / assets always 50/50?
Normally, the division of property is to share in the increased value of the assets during the marriage. This occurs by the party with the greater growth in value paying half the difference to the person with the lower growth. There are some exceptions including but not limited to those contemplated in s. 5(6) which allow the court to order an amount that is either more or less than one-half the difference between the net family properties.
Once the calculation is complete the court will consider any other circumstances relating to the conduct or situation of the parties in order to make a determination as to whether or not a s.5(6) variation would be appropriate.
The factors the courts will use when considering a deviation from a 50/50 division are:
- spouse’s failure to disclose to the other spouse debts or liabilities existing at the date of the marriage;
- debts and liabilities claimed in reduction of a spouse’s net family property that were incurred recklessly or in bad faith
- the portion of a spouse’s net family property that is made up of gifts given by the other spouse
- a spouse’s intentional or reckless depletion of his or her net family property
- the length of the marriage – It may be that an equalization payment would be disproportionately large in relation to a marriage that lasted less than 5 years.
- if a spouse has incurred a disproportionately larger amount of debts or other liabilities than the other spouse for the support of the family
- a written agreement between the spouses that is not a domestic contract, or
- Any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property.
Q: I think my spouse is spending our money recklessly and extending our line of credit. Is there anything I can do to stop him/her?
Yes, there is. You can bring an application under s. 7(1) for equalization of property pursuant to s. 5(3) due to the improvident depletion of your spouse’s net family property.
Essentially, this section will allow you to bring the claim for equalization despite the fact that you and your spouse are still cohabiting. However, in order for the claim to be successful, there must be a “serious danger” of improvident depletion.
You should be aware of the fact that an equalization payment will only be made once, therefore if you and your spouse do eventually decide to separate and/or divorce you cannot bring an application under s. 7(1) for a second equalization as only one is permitted. See: s. 5(4).
Q: My parents gave us significant money for our down payment on our home. Can I get that back?
It depends on the status of your relationship.
Firstly, if the down payment was given to you by your parents to fund the acquisition of a home that eventually became your matrimonial home, i.e. the home in which you lived throughout your marriage and at the time of the separation, then you cannot get the money back.
With matrimonial homes, the couple must share the full value of the property regardless of who paid for it or owns it. Pursuant to the s. 4(1) definition of net family property and paragraph 1 in the s. 4(2) exclusions a matrimonial home is never excluded from the calculations leading to an equalization payment.
If instead you and your partner are common law and not legally married then you may make a claim for a resulting trust so that the value of your parents’ contribution can be returned to you.
A resulting trust contemplates that one party financially contributes to the acquisition of a piece of property, in whole or in part, and as a result becomes the beneficial owner of the property. The other party (or parties), instead, is given legal title to the property and hold it in trust for the beneficial owner. Moreover, there was a common intention that a resulting trust would arise based on the different contributions made. Then, upon separation, the beneficial owner is entitled to an interest or share in the value of the property proportionate to his or her contribution.
Therefore, if your parents contributed financially and legal title was put in your name or your spouse’s name or is held jointly by you and your spouse then your parents may be deemed part beneficial owners of the property and can get their money back.
The same reasoning applies to a claim for a constructive trust except there is no need for a common intention to be found and the parties must satisfy the principles of unjust enrichment and show that there is a connection between the contribution made and the property in question.
Lastly, you can make a simple claim for unjust enrichment. This will require that you show that based on your parent’s contribution (a deprivation) your spouse was unjustly enriched and there was no legal reason for the enrichment and so they should be compensated.
Q: We were never married, but have lived common-law in a home that I purchased after we had lived together. Is the house mine?
Yes, the house is yours but beware because if your common law spouse contributed to the preservation or maintenance of that property through either financial or non-financial means (i.e. cooking, cleaning, etc.) then he or she may have a claim for unjust enrichment, constructive trust or a resulting trust.
The principles of unjust enrichment are:
- an enrichment of one spouse
- a corresponding deprivation of the other
- no juristic/legal reason for the enrichment
A claim for unjust enrichment will result in the compensation of your spouse for his or her contributions which resulted in your enrichment and his or her corresponding deprivation.
A claim for constructive trust, on the other hand, will result in your spouse gaining an actual ownership interest in the property in question proportionate to the contributions made.
These contributions can be either financial or non-financial and in order to be successful in a claim for constructive trust, your spouse will have to satisfy the principles of unjust enrichment as well as evince some sort of nexus between the contributions made and the property owned.
Lastly, your spouse may make a claim for a resulting trust. Typically, this claim arises when there is a financial contribution made to the acquisition or maintenance of property vesting a beneficial interest in the individual who contributed and legal title solely in the other individual. If a common intention can be found, based on the conduct of the parties, then an interest accrues on the party without legal title and a resulting trust arises.
Q: We have been separated for almost six years. Can I still get an equalization payment?
Yes, but beware of the fact that this may be your last year to apply to the court for an equalization payment.
S. 7(3) imposes limitation periods on bringing a claim for equalization and subsection (b) states that an applicant may bring a claim “six years after the day the spouses separate and there is no reasonable prospect that they will resume cohabitation.”
Also, if within the six-year period you and your spouse obtained a divorce order then s. 7(3)(a) states that an application for equalization shall not be brought after 2 years from the date of divorce. However, should the period expire, you may still be able to bring an application pursuant to s. 2(8) which allows for the possibility of obtaining an extension from the court. You should note that it is rarely granted and the legislation imposes a strict test which must be satisfied.
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