The Family Law Act provides for a division of “Net Family Properties” of the parties/spouses as of the date of separation. It is not simply a 50/50 division of all of the parties’ property as of the date of separation. It can be a very difficult calculation. Sometimes it is necessary to retain the opinion of experts to advice as to the value of an asset as of the date of marriage or the date of separation (e.g. business valuations, pension etc.). A pension can be a very valuable asset. Although a spouse may not have access to a pension (which they obtained through their employer) as of the date of separation, it must still be valued for the purposes of determining a division of net family property and included in the calculation.
Furthermore, some parties do not realize the full extent of his/her spouse’s assets. Some assets may be hidden or the parties do not realize that they have an asset that must be shared with his/her spouse. An effective Family Law lawyer would be able to assist you with these issues. An individual’s “Net Family Property” is defined as the “value of all of the property, except excluded property, that a spouse owns on the valuation date (i.e. the date of separation), after deducting the spouse’s debts and liabilities and the value of property, other than the Matrimonial Home, that the spouse owned on the date of marriage, after deducting the spouse’s debts and other liabilities, calculated as of the date of marriage”.
Therefore, a party must essentially determine the increase in value of his/her net worth (assets less all liabilities) from the date of marriage to the date of separation. Therefore, the determination of the date of separation (defined as when there was “no reasonable prospect of reconciliation” between the spouses) is critical. It will be a question of fact. Sometimes parties can differ greatly as to the date of separation. If the value of a spouse’s assets increased or decreased significantly between the Wife’s date of separation and the Husband’s date of separation, the determination of the division of properties between the spouses can be difficult.
Once each party determines his/her “Net Family Property”, one party usually pays the other party an “Equalization Payment.” An “Equalization of Net Family Properties” is defined in the Family Law Act as “the spouse whose net family property is the lesser of the two net family properties is entitled to one-half of the difference between them”. Therefore, if a Husband’s “Net Family Property” (i.e. Assets – less – Liabilities – less- net worth as of the date of marriage) is determined to be $100,000.00 and the “Net Family Property” of a Wife is determined to be $0, the Husband would owe the Wife an “Equalization Payment” of $50,000.00 in order to divide their respective “Net Family Properties”.
Lorne Fine is a family lawyer practicing in the law firm of Lorne Fine Professional Corporation – Barristers & Solicitors, serving the City of Toronto and its surrounding areas. He can be reached at 416-661-2066 and [email protected]. View his web site at www.TorontoDivorceLaw.com.