The rules about how to divide property and debt apply to both:

  • married couples, and
  • couples who have lived together in a marriage-like relationship for at least two years (some people call this a common-law relationship).

The law calls both of these kinds of couples spouses.

DISCLAIMER: The information given here is for general reading – not legal advice.  If you have a legal problem or need legal advice, you should speak to a lawyer.

This script discusses dividing property and debt between married spouses and unmarried spouses when their relationship breaks down.

Who is a “spouse”?

Who is a “spouse”?

Property and debt are divided between spouses under the Family Law Act. The “spouses” who are entitled to apply for an order dividing property and debt are:

  • people who are married; and
  • people who have lived together in a “marriage-like relationship” for at least two years.

Claims for the division of property and debt must be made within two years of the date married spouses are divorced or their marriage is annulled or, for unmarried spouses, the date of their separation.

If you don’t qualify as a “spouse”, the laws that apply to your situation are different and above script does not apply to you.

The rules about dividing property, including a matrimonial home, do not apply to common-law couples. If you are in a common-law relationship, the property you bring into the relationship, plus any increase in its value, usually continues to belong to you alone. If you and your spouse separate, there is no automatic right to divide it or share its value.

The law is complex for couples who do not qulify as “spouse’.  If you have a legal problem or need legal advice, you should speak to a lawyer.

The basic principles of the Family Law Act

The basic principles of the Family Law Act

The law about dividing property and debt is contained in the Family Law Act. In general:

  • After you separate, the law says that all family property and family debt must be divided equally between you and your spouse, unless you have an agreement that says you’ll divide them differently.
  • In case of excluded property – i.e. Property one of you owned before you got together,  you don’t split the value of it equally if you separate or divorce. However, if the property increases in value while you live together, the increase is considered family property. You must divide the increased value.   
  • Each spouse is responsible for one-half of the debt accrued during the relationship, including any debt incurred after separation to maintain family property. The debt spouses are obliged to share is called “family debt”.

The payment that may be owed to one of the spouses in order to effect this sharing is called an equalization payment, or an equalization of net family property.

NOTE: These automatic property sharing provisions only apply to married spouses. If you are in a common law relationship, you are not entitled to an equalization payment, but may be entitled to a payment from your spouse to pay you back for a direct or indirect contribution to property that he or she owns. These claims are referred to as trust claims.

What is “family property”?

What is “family property”? 
Family property is all of the property owned by either or both spouses at the time an application is made under the Act, minus any excluded property.

Family property includes:

  • real property and anything attached to the land, such as buildings.
  • interests in companies,
  • partnerships and businesses;
  • money owed to a spouse;
  • bank accounts,
  • RRSPs and pensions; and,
  • includes moveable objects like household goods, jewelry and carsetc.
  • family property also includes the amount of the increase in value of any excluded property.
What is “excluded property”?

What is “excluded property”?
Excluded property is the property a spouse brings into a relationship, including some kinds of property received during the relationship. Excluded property received after a relationship starts may include inheritances and gifts from people other than the other spouse; court awards; insurance money; and, interests in certain kinds of trusts. Excluded property also includes property bought with excluded property.

Excluded property is presumed to remain the property of the spouse that owns it. However, recent court decisions have complicated what is considered excluded property and when does excluded property lose its exclusion and become family property. As a result it is strongly recommended that you consult a family law lawyer to obtain legal advice.

Who decides how to divide our property?

Who decides how to divide our property?

There are three people in our world that can make that decision-

You and your spouse as a team:  Spouses can come to an agreement on how to divide their property. You can make this agreement before you enter into the marriage (‘pre-nuptial agreement’), or during the marriage (‘marriage contract’). Or you can agree after you separate. This is called a (‘separation agreement’).

Your lawyer and your spouse’s lawyer can help you and your spouse work out an acceptable agreement. Coming to an agreement on how to divide your property may be a lot less expensive than going to court to divide your property so you should seriously consider how you may come to a fair agreement with your spouse.


Mediation | Arbritration: If You and your Ex simple cannot come to a settlement then the next step is – your lawyer will arrange for a mediator. The mediator may decide how to divide your property based on either yours and your spouses wishes or may based his discion on the provisions found in the family Law Act.     NOTE: The realty is that vast majority of divorces end in meditation rather then a courtroom.


The Judge: Family Court of the Superior Court of Justice – deals with property division matters here in Ontario.  This is the last stage to go through if you and your spouse cannot come to a settlement through mediation or arbitration.  




Are RRSPs and pensions family property?

Are RRSPs and pensions family property?

 (RRSPs) and  (RRIFs):

Registered retirement savings plans (RRSPs) & Registered retirement income funds (RRIFs) are considered family property.  RRSPs (both locked-in and non-locked-in) don’t need to be valued upon marriage breakdown. This is because RRSPs are simply tax-deferred investment accounts, and their value at any time is equal to the account balance. In many provinces, however, defined-contribution pension plans do have to be valued.

CPP splitting:  

The Canada Pension Plan (CPP) contributions you and your spouse or common-law partner made during the time you lived together can be equally divided after a divorce or separation. This is called credit splitting.

Credits can be divided even if one spouse or common-law partner did not make contributions to the CPP. Credit splitting may help you qualify for benefits and can affect the amount of any current or future benefits under the CPP program for both you and your former spouse or common-law partner.


Dividing private pension plans:

Make note that every asset grown during the marriage is up for grabs. Funds in employer-sponsored pension plans accumulated during marriage are also family property.   There are issues like taxation and estate planning that would come into play when separating assets especially pension plans.

In all cases of separation or divorce where you and your partner have government or private pensions, you should consult a lawyer so you fully understand your entitlement and transfer options. And regardless of whether you have a pension – and especially if you don’t – it’s also a good idea to meet with an advisor, so you can make sure you have a financial plan that reflects your new status.

Are shares in a company family property?

Are shares in a company family property?

One of the most contentious issues in divorce proceedings is the division of business assets. Ontario views assets that are acquired as a result of the work and investments carried out during a marriage as subject to equitable division. 

When dividing stock assets, the dates on which stocks are purchased, awarded, vested, or exercised must all be taken into account. This can mean the difference between those assets being viewed as marital or separate property.

Your attorney can help you determine how much of your stock assets may be considered separate property and how much may be viewed as marital property by the courts.

Is an inheritance family property?

Is an inheritance family property?

Generally, inheritances are not subject to equitable distribution because, by law, inheritances are not considered marital property. Instead, inheritances are treated as separate property belonging to the person who received the inheritance, and therefore may not be divided between the parties in a divorce.

Your inheritance is your sole and separate property as long as you take steps to segregate it from marital assets. Therefore, if the gift or inheritance comes in the form of cash, you should always CONDIDER BELOW MENTIONED.

Keep Gift & Inheritance Money in a Separate Account:  if the gift or inheritance comes in the form of cash, you should always keep that money separate.

Do Not Use Gifted Money or Inheritance for the Matrimonial Home: Therefore, if you use inherited money to pay down your mortgage; as a down payment on your home; on a home line of credit; or even on renovations for the home, then you will no longer be able to exclude those funds.

Yes you can use Gifts/Inheritance to Purchase Property:  but use caution how you do it. Keep track of what, when and how the cash was used. Especially, if the item was purchased with a combination of inherited or gifted funds and other family funds.

Pre-Marital Gift & Inheritance Money: Gifts and inheritances received before marriage are treated the same way as pre-marriage assets. This means the value of the gift or inheritance that was still in existence at the time of marriage belongs to the recepient. If that gift or inheritance still exists when the couple separates and its value has increased, the amount of the increase is divided equally between spouses.

Protecting property until settlement

Protecting property until settlement

It is important to keep track of all your property until your settlement is final. This can be difficult, particularly if assets are not in both names. Your ex-partner may try to hide, sell or give away your property to ‘get around’ an order of the court.  There are things you can do to protect your property, for example, through getting a ‘caveat’ or ‘injunction’.

CAVEAT: is a legal notice on your property at the Land Titles Office. A caveat acts as a warning or formal notice to tell the public that there is an interest on the land or property for a particular reason.. The property can’t be sold until the caveat is removed.

INJUNCTIONS: In divorce actions, property-related injunctions, which, for example restrict the sale or transfer of property, are common.   It may be possible to get an injunction from the court to prevent assets being sold. If you believe your ex-partner has or will sell, transfer or give away assets that should be part of your joint assets, you should take action immediately.    If assets have already been sold, it may be possible to get an order to ‘freeze’ (stop the use of) the sale money. Bank accounts and other cash resources may also be frozen in other circumstances.

Hiding assets is a reckless action. If you get caught — and the odds are you will — penalties can run the gamut, from a property settlement that allocates a much greater amount of the marital assets to your soon-to-be ex-spouse, contempt of court or criminal charges for fraud or perjury.

Unequal Division ?

Are there any exceptions to the equal division rule? 

As mentioned ealier under the Family Law Act – family property is split 50-50 bases. i.e. the payment that may be owed to one of the spouses in order to effect this sharing is called an equalization payment, or an equalization of net family property.

However, in circumstances where this equalization division of property may be unfair to one of the spouses, the court can order an unequal division of net family property under s. 5(6) of the Family Law Act.

Although the presumption of an equal division of family property and family debt is very strong and the court’s main duty is to ensure that property is divided fairly, there are limited circumstances in which unequal division of property may be the way to go.   Before the court will order unequal division of property, it must be satisfied that the results of the standard equalization process would be “unconscionable”.

Unequal Division - Factors Judges look into

What does the court look at when dividing family property or family debt unequally?

The factors s.5(6), the court will take into account in determining whether an equal division would be significantly unfair include:

  • the length of the spouses’ relationship;
  • A spouse’s failure to disclose to debts or other liabilities existing at the date of marriage;
  • The fact that debts or other liabilities that are claimed in the reduction of a spouse’s net family property were incurred in bad faith or recklessly;
  • The amount of a spouse’s net family property that is gifts made by the other spouse;
  • A spouse’s intentional or reckless depletion of his/her net family property;Whether an amount a spouse would receive is disproportionately large in relation to a period of cohabitation that is less than five years;
  • If, in supporting the family, one spouse has incurred a disproportionately larger amount of debts or other liabilities than the other spouse;
  • Any written agreements (other than domestic contracts) as between the spouses;
  • Any other circumstance relevant to acquiring, disposing, preserving, maintaining, or improving property.

The burden of proof is on the spouse who is seeking the unequal division. The threshold for meeting the test is exceptionally high. Circumstances pointing to “unjust” or “unfair” will not be sufficient to meet the test. The court must be convienced beyond resonable doubt that your case truly warrants unequal division.

Note: We strongly advice to consult a family lawyer to discuss the equalization process and to determine whether unequal division of assets might be warranted. 

When do you have to apply for a division of property and debt?

When do you have to apply for a division of property and debt?

If a couple are able to agree on how their property and debts will be divided, they can make a separation agreement summarizing the terms of their settlement. However, if they can’t agree, one or either of them will likely start court proceedings and the court will make an order dividing their property and debt for them.

What happens if you can’t agree?

If a couple cannot agree about how to divide property, they can go to court and ask a judge to decide. You can ask a court to help divide your property if:

  • You can’t agree about how to divide something you and your spouse bought together
  • You and your spouse planned to share property that was only in one person’s name
  • The property is in your spouse’s name, but you made it possible for them to buy it and you suffered financially because of this
  • The property is in your spouse’s name, but you helped add to the value of that property, and you suffered financially because of this

You should be able to get some of the value of property that is in your spouse’s name if you can show how work that you did helped your spouse to get richer i.e you contributed to your spouse’s business or supported them while they were in school or advancing their career.

Women’s work in the home, including caring for children, is one thing that makes it possible for many couples to get richer. The court often recognizes this work, but fighting for this in court can be a long process and can cost a lot of money.

If you think you might have a right to some of the value of your spouse’s property, talk to a lawyer. For information on how to find a lawyer see Where to get help when you need it.

It is not necessary to start a court case to divide property or debt, and you do not need to get a divorce order first if you’re married. However, if an agreement about dividing property and debt can’t be reached:

  • married spouses must apply to court for a division of property and debt under the Family Law Act within two years of the date that court made a divorce order or a declaration that their marriage is a nullity; and
  • unmarried spouses must apply to court for a division of property and debt under the act within two years of the date they separated.

Property Division

Whether you’re going through a divorce or you have decided to go your separate ways, there is so much to consider. The division of your assets is often one of the hardest issues to resolve. Most couples accumulate property together like their homes, vacation property, cars, art, and more.  For some couples the division of property can get very messy, while others are able to deal with it quickly and easily.

In the eyes of the law a marriage is an equal partnership. So, whether a spouse is responsible for running the household or earning family income, their contribution to the relationship is equally important. When a marriage ends, the partnership is over and property has to be divided.

Splitting Assets and Debts

You need to know what you and your spouse are worth together and what you’re worth on your own. It sounds like a big job but it comes down to a simple equation:                Net Worth = Assets – Liabilities.

It does get a little more complicated. There are three categories of assets:

Joint Assets These include property such as the home you owned together and any other real estate holdings; they include joint savings accounts, chequing accounts, mutual funds and other investments, cash, and any business interests that are jointly owned.

Your Assets These are accounts that you opened or owned before you were married and to which you have remained the sole contributor. Properties that you owned before you married are also included in your assets.

Spouse’s Assets These are anything your spouse opened or owned before the marriage, including RRSPs or assets inherited from family members.

Divorce is a federal responsibility in Canada, but the division of property between separating/divorcing spouses is under provincial jurisdiction and each province and territory has its own set of laws to cover these issues.   

In Ontario we have:    Family Law Act, R.S.O. 1990, c. F.3

For more information, visit the Ontario Ministry of the Attorney General website.

Getting advice and the legal help you need

If you are about to separate, have recently separated, or are planning to get a divorce, a lawyer can help you understand your legal rights and ensure that your interests are protected.

Each spouse should acquire independent legal advice. Even if you and your spouse agree on property, child custody and support, you should consult a lawyer to make sure you both know your legal rights and obligations.

If you and your spouse do not agree on how to divide property, how much support needs to be paid, or who will have custody of your children, a lawyer will be able to provide you with specific legal advice for your situation. Agreements reached without independent legal advice may not be legally binding.

It is advisable to get the legal help that’s right for you.

If you are considering representing yourself  in a family law matter, you may wish to get help from Highclass Family Law “DO-IT-MYSELF-DIVOICE KIT”  Our experienced family law lawyer Sabrina can provide information, assistance, advice and practical tips to help you prepare your case and improve your outcome. We provide specific services for fixed prices, and you only pay for the services you want.

If you are considering hiring a lawyer to represent you, for legal advice and assistance regarding separation, divorce and other family law matters, contact our Family Lawyer Sabrina @ 416.444.4252



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