How Is Property Divided in an Ontario Divorce?
Short answer: Ontario does not simply split every asset 50/50. Under Part I of the Family Law Act, each spouse calculates their net family property (NFP). The spouse with the higher NFP pays the other one-half of the difference. This payment is called an equalization payment.
| Step | What happens |
|---|---|
| 1. Value your property | List everything each spouse owns on the valuation date (usually the date of separation), including bank accounts, real estate, vehicles, pensions, RRSPs and business interests |
| 2. Subtract debts | Deduct debts and liabilities that each spouse had on the valuation date |
| 3. Deduct certain amounts | Deduct the net value of property owned on the date of marriage (other than a matrimonial home), and remove excluded property such as most gifts and inheritances |
| 4. Compare | The spouse with the higher NFP pays half of the difference to the other spouse |
Equalization is a payment, not a transfer of each asset. Title does not decide the result. A spouse whose name is not on the house can still receive an equalization payment, and a spouse whose name is on every account does not keep everything.
These rules apply to married spouses. Unmarried partners are treated differently. See our guide to common law in Ontario.
How Net Family Property Is Calculated
Net family property is the value of everything a spouse owns on the valuation date, minus debts and minus a few deductions. The main building blocks are below.
What Counts as Property
- Real estate, including the matrimonial home, a cottage or rental property
- Bank accounts, investments, TFSAs and RRSPs
- Pensions earned during the marriage (see dividing pensions and RRSPs in an Ontario divorce)
- Interests in a business or professional practice
- Vehicles, valuables and other personal property
Property Owned on the Date of Marriage
The net value of property you owned on the date of marriage is deducted from your NFP. This protects what you brought into the marriage. One important exception applies to the matrimonial home. If you owned a home before marriage and it became the matrimonial home, you cannot deduct its date-of-marriage value.
Excluded Property
Some property is excluded from your NFP altogether:
- Gifts or inheritances received from a third person after the marriage, other than a matrimonial home
- Damages for personal injury, and life insurance proceeds paid on the spouse's life
- Property that a marriage contract or other domestic contract says is excluded
To rely on an exclusion you must usually be able to trace the asset, which means showing where it came from and where it went. Keeping inherited money in a separate account in your own name makes tracing much easier.
Debts reduce your NFP, and bankruptcy can affect equalization claims. See can you claim equalization after bankruptcy.
The Matrimonial Home: Special Rules in Ontario
The matrimonial home is treated differently from every other asset. The rules protect both spouses, and the family, while a separation is being sorted out.
Equal Right to Possession
Both spouses have an equal right to live in the matrimonial home, no matter whose name is on the title or the lease. One spouse cannot lock the other out simply because they own the property.
No Sale or Mortgage Without Consent
A spouse generally cannot sell or mortgage the matrimonial home without the other spouse's written consent or a court order. Read more in sale of the matrimonial home without spousal consent.
Exclusive Possession Orders
A court can order that only one spouse stays in the matrimonial home. This is called an exclusive possession order. In deciding, the court looks at factors such as:
- The best interests of any children affected
- The financial position of both spouses
- Any written agreement between the spouses
- Whether other suitable and affordable housing is available
- Any violence or abuse by one spouse toward the other or the children
An exclusive possession order does not change who owns the home. It decides who lives there. For practical planning, see 5 steps to take about the matrimonial home before separation and spousal rights to a rented matrimonial home.
It is still treated as the matrimonial home if the spouses lived in it as their family residence. That means its full value on the valuation date counts in your NFP. This surprises many people who bought their home before they married.
Can Property Be Divided Unequally?
A court can order an unequal equalization payment only where an equal division would be unconscionable, which is a high legal standard. Examples that courts have considered include one spouse recklessly depleting family assets or taking on debts for reasons unrelated to the family. Unhappiness with the marriage, or an argument that you contributed more, is generally not enough.
Spouses can also agree on a different split in a marriage contract or separation agreement, which is why those documents matter. See understanding separation agreements in Ontario.
Time Limits for an Equalization Claim
An application for equalization must usually be started within two years after the divorce, or six years after separation if there is no divorce. Do not wait until the deadline. Evidence becomes harder to find and values can change.
If you are unsure how these timelines apply to you, speak to a family lawyer early. Our divorce lawyer Ontario page explains how the process works.
Practical Steps if You Are Separating
Record the Date of Separation
It is usually the valuation date, so write down when the relationship ended.
Collect Documents
Gather statements for bank accounts, investments, pensions and RRSPs, tax returns, mortgage and loan statements and the deed or lease.
Document Date-of-Marriage Values
Find statements or appraisals from around the date of marriage to support your deduction.
Do Not Move or Sell Assets
Avoid selling, gifting or moving major assets, and avoid taking on new debt, without legal advice.
Complete Your Financial Statements
Both spouses must provide a financial statement and a net family property statement with supporting documents.
Consider Mediation
Many property disputes settle through family mediation, which is usually faster and less costly than court.
Frequently Asked Questions: Property Division in Ontario
Talk to Us About Your Property Division
Every separation is different. With 20+ years in courts, Iqbal Law can explain how equalization, the matrimonial home and your agreements apply to your situation.
Schedule Your ConsultationThis page is for general information only and is not legal advice. No lawyer-client relationship is created by reading it. Laws change, so speak to a lawyer about your own situation.