How does property division work in a divorce?
In Ontario, property division is a bit of a misnomer, meaning it does not accurately describe how property issues are dealt with in Ontario. In Ontario, property is generally not physically divided. Rather, the spouse with more property pays the spouse with less property ½ the difference, so that each party’s net worth accumulated during the marriage is theoretically “equalized.” That is why the process in Ontario to deal with property is called “equalization of net family properties.”
The equalization process involves a consideration of both assets and debts, both at the date of marriage and at the date of separation. The definition of “property” is very broad, meaning it takes into account a lot of different things, some of which are not easily valued. Sometimes, determining values requires someone’s judgment, like an expert. Otherwise, if the matter is being negotiated, the parties might have to compromise on a value to avoid spending more arguing the value than what the item is worth.
Another very tricky issue is pensions. Pensions can now be divided at source in Ontario, meaning the pension company can actually provide the spouse the amount of the pension he or she is entitled to. However, dealing with pensions requires understand tax consequences and other details of the regulations regarding pensions. Because pensions can be worth a lot of money, they have to be addressed carefully.
An equalization payment calculation can be extremely complex and challenging. There are often complex valuation and tax issues. Dealing with pensions also can be greatly assisted by having a lawyer. Divorce lawyers at Modern Family Law LLP are here to help with such calculations and help you get a fair and just property resolution. Call 647-DIVORCE or use our contact form to set up a consultation.