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How Assets and Debts Are Divided Under the Family Law Act in Ontario

This is general information and should not be interpreted as legal advice. Contact a family law lawyer to understand your rights and obligations.

When a marriage ends, financial separation can be one of the most complex and emotional aspects of divorce. In Ontario, the Family Law Act governs how property, assets, and debts are divided between spouses. The goal of the law is to ensure fairness,  not necessarily an exact split of every item, but an equal sharing of the financial growth that occurred during the marriage.

Understanding “Net Family Property”

The cornerstone of property division in Ontario is the concept of net family property (NFP). Each spouse must calculate the total value of their assets and debts as of two key dates, the date of marriage and the date of separation.

To determine NFP, each spouse:

1. Lists all assets they own on the date of separation (such as homes, vehicles, investments, pensions, and RRSPs).

2. Subtracts all debts and liabilities that existed on that same date.

3. Subtracts the net value of their property on the date of marriage.

4. The result is each spouse’s net family property, a snapshot of the financial growth during the marriage.

The Equalization Payment

Once both NFP amounts are calculated, the spouse with the higher NFP must pay the other half the difference between the two amounts. This payment, known as the equalization payment, ensures both parties share equally in the financial gains of the marriage.

What Happens to Debts?

Debts are treated the same way as assets, they are factored into the NFP calculation. This includes mortgages, credit cards, loans, lines of credit, and tax debts. Only debts that existed on the date of separation are included in the calculation.

If a debt is in both names, both spouses remain responsible, even after separation. For individual debts, courts will consider who incurred the debt and whether it benefited the family. Debts taken for personal or non-family reasons may be excluded from equalization in some cases.

Common Exceptions

Certain types of property are excluded from equalization, including:

• Gifts or inheritances received during the marriage.

• Personal injury settlements.

• Life insurance proceeds.

• Property excluded by a valid marriage contract or prenuptial agreement.

  
  

Seeking Legal Advice

Dividing assets and debts can be complicated, especially when business interests, pensions, or significant liabilities are involved. An experienced Ontario family lawyer can help ensure property is properly valued, exclusions are applied correctly, and your financial rights are protected.

If you’re going through a separation or have questions about how your property and debts will be divided, contact Majoka Law today for clear, trusted legal advice tailored to your situation.