If you and your spouse decide to separate or divorce, you will need to divide your property and debts according to the law. Property includes things like your home, car, furniture, bank accounts, pensions, and investments. Debts include things like mortgages, loans, credit cards, and taxes.
The way you divide your property and debts depends on whether you are married or in a common-law relationship.
Married couples have to follow the rules of the Family Law Act, which say that:
- Each spouse has a right to an equal share of the net family property. This is the value of all the property that either spouse owns at the end of the marriage, minus any debts and liabilities, and minus the value of any property that they brought into the marriage (except for the matrimonial home).
- The matrimonial home is the home where the spouses lived together before they separated. It can be a house, condo, apartment, or any other type of dwelling. The matrimonial home is treated differently from other property because both spouses have an equal right to live in it and to share in its value, regardless of who owns it or who brought it into the marriage.
- If one spouse has a higher net family property than the other, they have to pay the other spouse half of the difference. This is called an equalization payment. For example, if one spouse has a net family property of $100,000 and the other has $50,000, the first spouse has to pay the second spouse $25,000 as an equalization payment.
- Spouses can agree to divide their property differently from what the law says, as long as they both understand their rights and obligations and sign a separation agreement or a marriage contract.
Common-law couples have to follow different rules because they are not covered by the Family Law Act. They do not have a right to an equal share of each other's property or to an equalization payment. Instead, they have to follow these rules:
- Each spouse keeps the property that they own or that is registered in their name. They also keep their own debts and liabilities.
- If one spouse contributed to the value of the other spouse's property, they may have a right to claim a share of that property or to be compensated for their contribution. This is called a constructive trust or a resulting trust claim. For example, if one spouse paid for renovations or repairs on the other spouse's house, they may have a claim for part of the house's value.
- If one spouse was financially dependent on the other spouse during their relationship, they may have a right to claim spousal support from the other spouse after they separate. Spousal support is money that one spouse pays to the other to help them with their living expenses and to recognize their contribution to the relationship.
Whether you are married or in a common-law relationship, dividing your property and debts after separation or divorce can be complicated and stressful. It is important to get legal advice from a family lawyer who can help you understand your rights and options and guide you through the process. You can find a family lawyer in Toronto by contacting the Law Society of Ontario's Lawyer Referral Service at 1-800-268-8326 or 416-947-3330.