Property Division in Ontario Divorce

Ontario does not split property 50/50. Instead, Ontario uses "equalization of net family property" — a system where each spouse calculates the increase in their net worth during the marriage, and the spouse with the greater increase pays half the difference to the other spouse. Here's how it works: 1. **Calculate each spouse's Net Family Property (NFP):** - Value of all assets on the date of separation - Minus debts on the date of separation - Minus value of assets brought into the marriage (excluding the matrimonial home) - Minus inheritances and gifts received during the marriage (if kept separate) 2. **Compare the two NFPs:** - The spouse with the higher NFP pays half the difference to the other spouse - This is called an "equalization payment" Example: If Spouse A's NFP is $500,000 and Spouse B's NFP is $200,000, Spouse A pays Spouse B an equalization payment of $150,000 (half of the $300,000 difference).

The matrimonial home (the house you lived in as a married couple at separation) has special status in Ontario: **It cannot be excluded.** Even if one spouse owned the home before the marriage, its full value on separation is included in their NFP calculation. This is different from other assets, where pre-marriage value is excluded. **Neither spouse can sell or mortgage it without the other's consent** — even if only one name is on title. **Both spouses have equal right to possession** until a court orders otherwise, regardless of whose name is on the title. If you have multiple properties that could qualify as a matrimonial home (e.g., a cottage), they may all receive this special treatment.

Pensions are often the second-largest asset after the matrimonial home. In Ontario, pensions are divided as follows: **Defined contribution plans:** The value is simply the account balance. Easy to divide. **Defined benefit plans:** These require a formal valuation. Ontario allows two methods: - **Transfer of a lump sum:** A portion of the pension value is transferred to the non-member spouse's RRSP at the time of separation - **Division at source:** The pension is split at retirement, with each spouse receiving their share directly from the pension plan Most pension plans require a domestic contract or court order before they will divide the pension.

If you are not legally married, Ontario's equalization rules do NOT apply to you. Common-law couples in Ontario have no automatic property division rights — regardless of how long you have been together. You keep what is in your name. If you contributed to your partner's assets (e.g., helped pay the mortgage on their house), your only option is a claim for "unjust enrichment" or a "constructive trust." These claims are: - Expensive to pursue (often requiring trial) - Uncertain (outcomes depend on specific facts) - Time-consuming (2-4 years is common) This is one of the most significant differences between marriage and common-law relationships in Ontario.