Property Division for Married Couples

property division

Often new clients become panicked about having to give up their grandmother’s dining table or a set of classic vinyl records. Gentle probing elicits their belief that married spouses have to share their all property with their spouse in a 50/50 split. Breathe deeply. It doesn’t work that way in Ontario. There are exemptions for certain kinds of property and credits for the value of assets brought into the marriage.

Critical to the “50/50” scheme is that it is the net difference in value that is divided, not each actual asset or debt. The best news is that, if both agree, the property can be shared in different ways, or not at all. Have your family law lawyer ensure any proposed deal is the best one for you, and put the deal in writing.

Equalizing the Net Position

The legislated division of property regime is applicable to married spouses upon separation, divorce, and other special triggering events. Under the law a marriage is considered to be an equal partnership between the spouses. As with an equal partnership in business, the settling of who owns what when the marriage breaks down should take into account the contributions of each spouse to the marriage. To start the process, each spouse provides a complete accounting of all assets and debts owned together or independently at the date of marriage and at the date of separation.

The entries of the two individual statements are then synced into a single format to calculate the net financial position of each spouse. One half of any difference between the totals will be paid by the spouse with the greater net financial position to the other spouse. This half of the difference becomes the equalization payment, so that each spouse leaves the marriage with exactly the same net position.

Valuation Date and Date of Separation

The Valuation Date is a term of legal importance. It refers to the earliest date upon which an event happened which led to the breakdown of the marriage. An example is the discovery of intolerable behavior by one spouse who becomes simply unable to continue the marriage. It is one of the dates on which all assets, debts, and liabilities are valued for the purposes of assessing the division of property between the spouses. The other date on which an accounting of property is made is the date of marriage.


The parties may agree between themselves not to formally value certain assets, such as an old model car or a month-old employment pension plan. However, declining to have a business or foreign stock holdings valued may have significant repercussions for a client.

The wiser decision is to have the asset valued. Being fully informed before any decision is taken allows a spouse to appropriately judge whether an asset’s value should be included or excluded from the property equalization process.

Equalization Payment

Creative solutions are often devised by the lawyers if a spouse owes a payment to equalize their net financial position with that of the other spouse. Such helpful solutions can include transferring investments, taking a charge against real estate, or paying in installments if paying the entire equalization payment owed all at once would result in financial hardship to the paying spouse. An equalization payment is often deducted from the net proceeds of the sale of the matrimonial home and provided to the recipient spouse. Similarly, posting other assets as security to ensure the obligation is satisfied is another option to guarantee an equalization payment.

Unequal Division

There may be instances when an equal sharing of the value of the spouses’ net family property would be unfair or unconscionable. In these cases, the spouses consider all the facts and circumstances to negotiate what both regard as a fair settling of the family and individually owned property and debts. If negotiation is not a viable approach, then commencing a court action or family arbitration may be needed.

Effect of a Domestic Contract

If the clients have an enforceable Domestic Contract in place, it may provide that no sharing of value of any kind of property is to be assumed or carried out. In this case, the Contract overrides the obligations set out in law and no division of property occurs. Whatever each spouse came into the marriage with or acquired during the marriage is divided by ownership. Joint ownership is typically divided by an equal sharing of the value of the asset or debt.

On the other hand, the Contract may only exclude the division of value of certain assets, and the balance of other property held by the spouses is shared under the equalization process specified by law.