When a marriage breaks down, the spouses are entitled to equalize their net family property. The legal principle behind equalization is that marriage is a joint undertaking and all property accumulated by the spouses during the marriage is to be divided.
A mathematical formula is used to calculate each spouses' net worth. This is done by looking at the value of what the spouses own on the date of separation, subtract their debts, and then divide whatever is left.
First, a list is created of all property (assets) you own, your spouse owns, and that is owned jointly. The value of this property must be disclosed. This value is determined at the date you separate.
Next, all debts owed by you, your spouse, and that are owed jointly, must be disclosed, again as at the date of separation.
Thirdly, the value of all the debt is subtracted from the value of the property (assets), resulting in a number. Deducted from this number is any property that you owned on the day you were married. In other words, if it was yours when you got married, it is still yours. It is not even necessary for the property to still be in existence when you separate. But there is an important exception, and that is the matrimonial home, the home you lived in during your marriage and still owned on the date of separation. This, by law, is treated differently.
Finally, the value of any excluded property is deducted from the calculation. This may be money you inherited, gifts you received from a third party, or damages you received from a personal injury claim after the date of marriage.
Once the calculation is completed, we look at which spouse has more net family property. In other words, what is left over after all the deductions are made. Whichever spouse has more must pay half of that difference to the other spouse. That is what we refer to as the equalization payment.
Determining the division of property for unmarried couples is different than that of married couples.
For the most part, determining the division of property for unmarried couples is based on ownership only (which spouse owns the property). However, the division of property for common law spouses can be very complex because there can be trust claims made by a spouse for a beneficial interest in property that they do not own, as well as other legal claims where you will need the assistance of one of our family law lawyers.