Page 8 - Demo

PROPERTY DIVISION
In Ontario, when certain events occur, the Family Law Act gives one of the spouses in a marriage the
right to a payment based on the value of non-excluded property (net family property) acquired during cohabitation under the marriage. The process for determining this payment is called property division, although there is no physical dividing of property. What is actually dividing is a dollar amount based on the values of the spouses’ respective property holdings. A debt (payment) is created in the process, not by property interest. In the terminology of the Family Law Act, property division is a division of the difference between the Net Family Property of the spouse with the greater net family property and the spouse with the leaser net family property.
The occurrence of one of certain de ned events crystallizes the entitlement to a payment. This crystallization also establishes the closing date for the acquisition of the property to be valued. The closing valuation is also made as of this date. Because of its importance in the valuation aspect, the date when this event occurs is called, rather obviously, “valuation date.”
The principle crystallizing events are the separation of the spouses or of the death of one of them. The separation must be of a permanent nature, and not a temporary separation or a “cooling-off period”. It must be a separation of the spouses such that “there is no reasonable prospect that they will resume cohabitation”.
Other events that crystallize the right to a division of the net family properties and establish the valuation date are:
• the granting of a divorce or a declaration of nullity, or
• the commencement of an application by one of the spouses to have the difference between the net
family properties divided in a situation where the spouses are still cohabitating and there is a danger that the others spouse may deplete his or her net family property.
Where there are combinations of events - a separation followed by a divorce, for example - the right to a division crystallization and the valuation date is set by the earliest of the events; in this example, by the separation.
On the death of one of the spouses, the survivor, if his or her net family property is less than the deceased, has the right to choose between:
• the entitlement resulting from a division of the two net family properties, and
• the bene ts under the will left by the deceased, or if there is no will, the entitlement under the
Succession Law Reform Act.
The amount of the payment depends upon:
• the total value of each spouse’s non-excluded property acquired during cohabitation under the marriage, and
• the proportion by which the difference between these two totals is divided between the spouses.
In most cases, the division is in equal shares giving rise to an “equalization payment.” It is only when an equal division would be “unconscionable” that the division of the value of the non-excluded property is in unequal shares. The circumstances in which a court is likely to make a nding of unconscionability and award an amount that is more or less than half the difference between the net family properties are where:
• A spouse fails to disclose debts existing at the time of marriage;
• A spouse incurs debts recklessly or in bad faith that reduces his or her net family property;
• A substantial part of a spouse’s Net Family Property consists of gifts made by the other spouse;
• There is a reckless depletion of Net Family Property;
MACDONALD & PARTNERS LLP