Area of Law: Family Law
Answer # 109
How is property divided?Region: Ontario Answer # 109
Contrary to what many people may think, the court does not just divide property in half when married spouses divorce. If you and your spouse do not have a marriage contract and you cannot agree on how property will be divided, your property will be handled according to the detailed rules and calculations under the Family Law Act.
Agreements between spouses
The easiest way to settle property issues is by reaching an agreement. If you and your spouse can reach an agreement on how to divide property to your mutual satisfaction, you do not need to follow the rules set out in the Act. However, most couples who are separating use the Act as a guideline. An agreement on how to allocate property can be reached directly between the spouses, through their lawyers, or through the assistance of a mediator. A mediator can often assist the parties to reach an agreement because they are neutral, and have experience with family law issues.
Spouses negotiating their own allocation of property should each get their own legal advice to make sure they know what they are entitled to under the laws of Ontario, and to make sure the agreement will be legally binding. Even if a mediator is being used, the parties should each have independent legal advice to make sure that they are comfortable with the agreement reached through the mediator. By reaching an agreement you can avoid the financial and emotional costs of a trial or other court hearings.
How property is divided under the Family Law Act
If you and your spouse do not reach your own agreement, your property rights will be determined according to the rules set out in the Act. Although there are some specific items, which may belong to each spouse, it is actually the value of all the property you and your spouse own jointly, minus the value of all property owned by each separately, on the date of marriage, which is divided. The courts will not normally decide who gets each specific item, which is usually decided by original ownership. Generally speaking, the value of all property is equalized between the spouses by a cash payment and this can include making the cash payment by way of transfer of land, cars and personal possessions, money in the bank, business interests, investments and pensions.
In general, the adjustment of property claims under the Family Law Act is intended to let each spouse keep the value of what they brought into the marriage, plus half the value of property acquired, or which increased in value, during the marriage. However, there are special rules about some types of property, especially the matrimonial home. For more information about divorce and the division of property in Ontario, visit the Ministry of the Attorney General website.
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