Separation and divorce are two of the most complicated processes in a person’s lifetime. After entering into a serious relationship for years in which everything is shared, you end up with a ton of collected stuff. But what are you going to do with all of it? What are you entitled to?
There are different laws when it comes to the division of property during separation. It is often hard to figure out who bought every couch, kitchen appliance, television, etc., throughout the course of a relationship. Therefore, in a separation, all these items are grouped together and understood as the family net value, which is then divided evenly between the two parties. This would group purchases such as cars and electronics with savings accounts and retirement funds. The ways in which the division is then determined is dependent on a variety of factors in terms of the nature of the relationship. Factors such as length of relationship, need and the ability of parties to pay, and parental responsibilities of the parties are a few of many factors that might be taken into account during calculations.
Common Law Separations
Common law relationships, regardless of the amount of time the couple has spent cohabiting, are not legally recognized in Ontario as anything close to married. Ontario laws only recognize couples that have a marriage certificate, even if there is a child involved. Therefore, in terms of separation, common law couples are not entitled to the equalization of family property under the Ontario Family Law Act.
This means that anything you bought during the relationship is yours, and anything your partner bought during the relationship is theirs. In terms of real estate, any owned property belong to whoever’s name is on the home. In the cases of joint ownership, both parties are entitled to the home. Therefore it can be sold and divided equally.
In cases in which a common law relationship has both parties contributing to something substantial, such as a home, which is in one party’s name and they separate, there are still options. The other party does have the option of claiming for a constructive trust, in order to remedy unjust enrichment. As long as you can prove that you helped a substantial amount to maintain the property in question, the court may award a monetary remedy for unjust enrichment, counting it as a small form of equalization.
It is highly recommended for common law couples to draft a cohabitation agreement, and respective wills are listing one another, should they desire never to be legally wed. A cohabitation agreement can outline similar clauses to a prenuptial agreement, and a division of property in the case of separation, that could assist in the future. Drafting a will is highly recommended as well, as common law spouses are not recognized in Ontario, and in the case of death, a spouse can be eligible for close to nothing without a will listing them.
Often, a short-term marriage constitutes any marriage under 5 years, but this can vary on a case by case nature. In terms of division of family property, or equalization, short term marriages are less likely to have considerations such as spousal support, but it is still possible.
An equal division of assets is mandatory by law for short-term marriages under the Ontario Family Law Act. This even applies to marriages that lasted less than a week, as once a marriage contract is signed, it becomes a legally binding marriage. The equalization is calculated the same as any marriage, with factors such as the individual parties’ net worth, the value of the matrimonial home, and all property before and after the marriage.
In order for a spouse to receive spousal support from a short-term relationship or marriage, they are required to show entitlement to receive support. If there is a disparity in the income of the two spouses that existed at the start of cohabitation, then the disparity can be easily explained as not being a result of the relationship or marriage. As such, it is likely that a short term marriage without children will result in little or no spousal support being paid. In the cases when spousal support is to be paid, the duration of such support ranges between one year for every year you lived together and half a year for every year you lived together.
If a short term marriage has a child or children involved, the entitlement to spousal support could change. Since in addition to the potential spousal support, the payer will also be paying child support, the calculations will differ with the new factor. The caretaker of the child may be eligible for spousal support payments until the child finishes high school, as taking care of the child as a single parent may take a toll on the caretaker’s personal work situation.
Long Term Marriages
Long term marriages are generally considered to be a marriage that has lasted longer than 5 years. This period of time does not account for the amount of time spent cohabiting before the marriage, as a marriage start date is the date of the marriage certificate’s validity. Long term marriages have a variety of factors that decide how much money is owed between parties, and often have higher chances of paying spousal support, child support and large equalization payments.
Under the Ontario Family Law Act, legally married couples who want to separate must divide their property equally, including everything owned and everything owed. Much like short term marriages, in order to receive spousal support, entitlement must be shown, but it is much easier to prove dependency in long term marriages. If one spouse stayed home to care for children while the other worked, and the children are in high school, it is clear that the dependency ran for years. This can still be disputed depending on the situation, but it is still easier to prove when there are children involved. Pension plan equalization is also more likely to be a factor in the divorce of a long term marriage, as there is more likely to be a large disparity over the amount of credits invested over time.
Other than the easier entitlement to spousal support and quality of pension plan equalization, the calculations for the division of property and child support are similar between long term and short term marriages. All factors will be taken into account, such as the value of the marital home, both parties’ income and pension accounts, increase or decrease in value on valuable items, other real estate owned and businesses owned and invested into. In a divorce, financial statements and income tax reports are required for the past 3 years, in order to get a fair assessment of what the division would look like. The lawyers of both parties will account for both parties’ 3 year reports in order to assess the equalization.
Recalculating or constructive trust disputes can still take place in the case of a dispute over ownership during equalization. If a spouse finds unjust equalization in regards to the amount invested in a particular asset, they can contest it, and if the court sides in their favour, the asset can be split differently. For example, the family car is in the wife’s name, who drove it everywhere, but the husband paid for all expenses, insurance, repairs and maintenance throughout the years. If the wife gets the car in the divorce, the husband might be able to apply for constructive trust, as he majorly contributed to the asset, in order to get more reimbursement.
What assets are considered in equalization?
- Matrimonial Home – Home lived in by the couple for the majority of the marriage duration.
- Any Other Real Estate Owned – Cottages, overseas homes, houseboats, condos. Anything in either parties named will be considered during the division of assets, even if only one name is on the ownership.
- Property Owned – Furniture (including couches, tables, lamps, beds, desks, artwork, chairs, instruments), Appliances (kitchen appliances, televisions, computers, home phones, gaming systems), Jewellery (Wedding rings, engagement rings, necklaces, earrings, bracelets, other rings, etc), Vehicles (cars, trucks, motorcycles, bicycles, tractors, trailers, scooters, boats, Dowries,
- Businesses (Businesses owned and operated by one of the parties, shares owned or invested in a business with potential for a return)
- Money – Pensions, All Bank Accounts (including savings accounts, RRSPs, RESPs, RIFFs, Bonds, etc.)
What assets are NOT considered in equalization?
- Property or assets acquired during the marriage as a result of inheritance
- Damages from personal injury
- Proceeds or a right to proceeds from life insurance policies
- Unadjusted Pension plans, unless lump sums are to be withdrawn to satisfy other equalization payments
- Property that the spouses have agreed by a domestic contract is not to be included in the spouse’s net family property (i.e. a prenuptial agreement)
- Pets – Pets are considered property, and will be considered the responsibility of the name of the sole owner at the time of adoption. Ontario courts will not be involved in cases of access or custody with pets, but a lawyer can assist in drafting a custody or access schedule listed in an agreement that both parties can then sign.
Do I really need a lawyer?
In cases of separation and divorce, there are many laws and regulations surrounding almost every aspect of ending a marriage. Even in being advised of your rights and knowing what property you are entitled to, there are calculations that only a lawyer or financial advisor would know how to calculate for equalization. In addition, the separation agreement itself still needs to be drafted, and then reviewed and signed by your partner. Should they contest it, they might retain a lawyer themselves, and you will need a lawyer to respond. Filing documents with the court is another large aspect of filing for a divorce, which is a process that will be completely new to you without proper guidance. It is possible to settle a divorce without a lawyer, but in order to ensure you are getting a fair deal, that is viable for both short term and long term plans, a lawyer is the best option.
Tailor Law Professional Corporation offers a 20 minute free phone consultation, in which you can speak to a lawyer about your situation and what you want in your separation agreement. The lawyer can talk to you about your rights and options, and help you come up with a plan to move forward and get the divorce process done as soon as possible.