Property - Division of Property
The Family Law Act sets out the rules for dividing property and debt between married couples. There are two ways of dividing property:
- 50/50 Split – the general principal of the Family Law Act is that both spouses own all the matrimonial assets equally. If you and your spouse cannot agree on how to divide the property, an application can be made to the Court to request a Judge to divide the assets. The Court will normally split the value of the assets equally between both parties.
- Unequal Division of Property – you can apply for an unequal division of property, but you have to prove that an equal division would be ‘grossly unjust or unfair’.
Couples always have the option of agreeing on how property will be divided in a marriage contract. The Family Law Act will not apply to a married couple if they opted out of the Act through a marriage contract. Couples are advised to seek legal advice with respect to division of property or signing agreements.
What Matrimonial Property is Divided?
Matrimonial assets include property obtained by either spouse during the marriage, such as furniture, bank accounts, work related benefits (such as pensions, RRSPs) or land used by the family. Note: this list is not exhaustive.
Not all property is considered matrimonial assets. The following are usually not considered matrimonial assets:
- Gifts, inheritances, settlements or trusts (unless used for a family purpose, or used to buy family assets);
- Family heirlooms;
- Personal injury awards (except any portion that compensates for economic loss);
- Personal possessions;
- Business assets;
- Property that is specifically excluded under a marriage contract;
- Property acquired after separation (separate bank accounts, credit cards, etc.)
The matrimonial home is the home and land that spouses shared together as a family. It could include a house, trailer, mobile home, and condominium.
Under the Family Law Act, both spouses have an equal share of the matrimonial home, regardless of whether it was previously owned by one spouse, how and when it was acquired, or if it was purchased in only one name. Married spouses own the home as joint tenants, which means they both have equal ownership rights to the property and on the death of the other spouse, full ownership of the home.
If a married couple has opted out of the Family Law Act through a marriage contract, this may not apply.
If one spouse moves out, the person who remains in the house is not normally allowed to deny the other access. A spouse can obtain exclusive possession of the family home if:
- He or she has bought out the other’s interest in the home,
- There is an order from court for exclusive possession. Either spouse can apply to the court for exclusive possession upon the breakdown of a marriage, or
- There is a court order which specifically denies one spouse access to the home for a period of time (such as stipulated in an emergency protection order, an undertaking, recognizance or probation order).
The Family Law Act does not provide for the division of property and debt between common law couples. For common law relationships, the basic rules are:
- When the couple separates, each person keeps what belongs to them (it is either registered in their name or the person bought it).
- Each person is also responsible for their own debts, so it is a good idea for people to hold onto receipts, invoices, etc.
- If an asset is in both your names, then normally you are entitled to half of its value. You will need to decide amongst yourselves how to deal with this: one will need to buy the other out, or you will need to sell the asset and divide the proceeds. If there is no agreement written, and you can’t come to an agreement, a Court may order that the asset be sold.
If there is a domestic contract, what is in each party’s name is not necessarily their property. It will depend on the terms of the agreement.
Remember, a common law couple always has the option to contract their own terms of separation, and may even contract into the terms of the Family Law Act so they have some of the same rights as married couples.
Federal laws have a range of rules for dividing plans and benefits (such as CPP) between common law couples. You should contact the appropriate organization to determine your eligibility for benefits.
Common law parties are advised to seek legal counsel to determine if there is any other basis for entitlement to property.