The division of net family properties in Ontario is governed by the Family Law Act.
This legislation only applies to married individuals. People who are not marriage – i.e. common law – ordinarily would be forced to make a trust claim to seek a payment for property from the other party.
In determining who gets how much for property in a marriage, parties must first exchange Form 13.1 Financial Statements. These Financial Statements set out each party’s assets and debts on the date of marriage and date of separation.
In determining the final property payout, the matrimonial lawyer merges both parties’ Financial Statements into a document referred to as the Net Family Property Statement.
In family law, for the purpose of determining the final property payment between spouses (also known as equalization payment) we take a snap shot of all assets owned and debts owed as at the date of marriage and date of separation.
A spouse who brings in more assets into the marriage (not including the matrimonial home) will receive credit for his or her increased net worth in the final calculation of net family properties.
So what is meant by net family properties or equalization payment?
To determine the equalization payment, we first determine the difference in net family properties. The equalization payment reflects half the difference in the spouses’ net family properties.
Net family properties is determined using the following formula:
(Date of separation assets)
(Date of separation debts)
(date of marriage assets minus date of marriage debts)
(excluded assets – meaning, property gifted by third parties, or inherited from third parties, which can be traced, aside from the matrimonial home).
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