It is the growth in the value of property during the marriage that the spouses share equally, and that is known as the Net Family Property (“NFP”). The NFP is calculated as of the Valuation Date (this being the date of separation, the date of divorce, or the date of annulment, whichever is the earliest).
The NFP includes the value of all the property, except “Excluded Property” (a concept which we will explain below), that a spouse owns on the valuation date, after deducting,
- the spouse’s debts and other liabilities, and
- The value of property, other than a matrimonial home, that the spouse owned on the date of the marriage, after deducting the spouse’s debts and other liabilities, calculated as of the date of the marriage.
“Excluded Property” is property that is not shared, and therefore does not form part of
the spouse’s NFP. The value of the property that a spouse owns on the valuation date
that does not form part of the spouse’s NFP includes:
- Inheritance or gifts the spouse received from a third person after the date of marriage (except matrimonial home);
- Income derived from gifted or inherited property, e.g. bank interest, that the donor or testator specified is to be excluded from net family property;
- Life insurance money the spouse received or will receive on the death of a third person, e.g. a parent;
- Money the court awarded the spouse for damages for being physically or mentally injured in any kind of an accident;
- Property, other than a matrimonial home, into which property referred to in the above items can be traced; and
- Property the spouses agreed under a marriage contract or separation agreement (a domestic contract) would not be included in the net family property.
The NFP is the total of the value of assets owned on the Valuation less total liabilities on the Valuation Date, and less the value of certain property which the Family Law Act further allows to be deducted or excluded.
Please note that the NFP cannot be less than zero, so even if the calculations yields a negative NFP number, the amount is deemed to be zero.
While this may seem complicated, we will be able to explain it for you clearly so you will have an understanding of how the formula may apply to your particular situation.
PROPERTY AND UNMARRIED SPOUSES
The key feature of Part I of Ontario’s Family Law Act is that spouses are entitled to an equal share of the total financial product of their marriage. The basic premise is that marriage creates an economic partnership and that both spouses make a vital and essentially equal contribution to the economic viability of the family unit and hence to the acquisition of wealth by the unit. Ontario has not extended this partnership model to unmarried couples.
For now, the system of separate property continues to apply in Ontario to determine the property rights of common-law partners. On separation, determination of which partner owns any property acquired by either of them during the relationship is determined, in the first instance, by the ordinary property rules. Paper title (who, if anyone, is registered as the owner) and who paid for the property are very influential in determining legal ownership.
However, common-law partners have access to equitable rules and remedies that may be of assistance to the partner who does not have legal ownership of the property. For example, using a resulting trust, a court can award a non-titled partner an interest in property where he or she contributed directly to the purchase price of property held by the other partner. Also, the courts have developed the concept of unjust enrichment as a cause of action in the context of property disputes between unmarried persons. What is important to understand is that unlike how it is with married couples who separate, for common law couples the goal is restitution, not equality. The court does not presume equal sharing, in the result, it strives only to achieve restoration. Restitution is restoring a benefit that it would not be just for the other party to retain.
If you are in a common-law relationship and there is property at stake, come and talk to us about your potential rights and obligations.
The fact that the ownership of the home you lived in with your spouse before he or she moved out is held solely in your name, doesn’t mean you can change the locks to keep your spouse from coming back into the home. If you lived in it with your spouse at separation then your home is likely what is called in law a “matrimonial home”. Under the Family Law Act, a matrimonial home is defined as ‘every property in which a person has an interest and that is, or, if the spouses have separated, was, at the time of separation, ordinarily occupied by the person and his or her spouse’.
If your home is a matrimonial home, then, under the Family Law Act, regardless of the ownership, both you and your spouse have an equal right to possession of the home. This means that even though your spouse moved out of the home, he or she can come back into the home anytime he wants, and does not need to ask your permission to do so. If you change the locks your spouse cannot legally be prevented from showing up with a locksmith, having the lock removed and entering the home.
One way to solve the problem is to apply to the court and ask that an order be made to give you what is called “exclusive possession” of the matrimonial home, and in fact, its contents (furniture, dishes, etc). Once you have such an order, your spouse cannot come into the home and you will be free to change the locks.