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Division of Property in Divorce & Separation

When a couple separates or divorces, one of the major issues that must be resolved is the division of property. This process can be complex and emotional, as it involves determining how assets and debts will be divided between the parties. In this article, we will explore the division of property in family law, including the legal principles that apply and the process for dividing property.


Legal Principles

The legal principles that apply to the division of property in vary depending on the jurisdiction. In general, however, the following principles are relevant:

  1. Equalization of Net Family Property: In Ontario and other provinces, the family law requires the equalization of net family property. This means that the value of each party’s assets and debts is calculated, and the party with the higher net worth must pay the other party an equalization payment to balance the scales.
  2. Exemptions: Certain assets, such as gifts or inheritances received during the marriage, may be exempt from the equalization process. In addition, assets that were owned by one party prior to the marriage or received after the separation may also be exempt.
  3. Unjust Enrichment: In some cases, one party may have benefited unfairly from the other party’s contributions during the marriage or common law relationship. In such cases, the court may order an unequal division of property to address the unjust enrichment.

Process for Dividing Property

The process for dividing property in family law can vary depending on the circumstances of the case. However, the following steps are generally involved:

  1. Financial Disclosure: Both parties are required to provide full and frank financial disclosure, including information about their income, expenses, and assets. This information is used to determine the value of each party’s assets and debts.
  2. Negotiation: The parties may attempt to negotiate a settlement of the property division issues. Negotiations can take place directly between the parties or through their lawyers, and may involve mediation or other forms of alternative dispute resolution.
  3. Court Proceedings: If negotiations are unsuccessful, the parties may need to go to court to have a judge make a decision about the division of property. In some cases, a court order may be necessary to enforce the equalization payment or to address issues such as the sale of a matrimonial home or the division of a pension plan.

Common Issues in Property Division

During the property division process, each party’s contribution to the marriage, their financial situation, and their future needs are taken into consideration. Family lawyers can provide valuable guidance on the division of assets and debts, helping clients understand their rights and obligations under family law.

Having legal representation during the property division process is crucial to avoid potential mistakes or oversights that can have significant financial consequences. There are several common issues that arise in property division cases, including the following:

  1. Matrimonial Home: The matrimonial home is often one of the most significant assets to be divided upon separation or divorce. The division of the matrimonial home can be complicated, as it may involve determining the value of the home, negotiating a buyout or sale, and addressing issues such as possession and occupancy.
  2. Business Interests: If one or both parties own a business, the valuation and division of the business can be complex. In such cases, it may be necessary to hire a business valuator to determine the value of the business and to negotiate a settlement that is fair to both parties.
  3. Pension Plans: Pension plans are another common issue in property division cases. Depending on the jurisdiction, pension plans may be subject to division. In such cases, it may be necessary to hire a pension valuator.

Determining the Value of Property

The first step is to determine the value of all assets, which include marital and separate property. Marital property pertains to assets acquired during the marriage, while separate property refers to assets obtained before the marriage or through inheritance or gift.

Determining the value of each asset is necessary before it can be divided, and this usually involves an appraisal or valuation. For certain assets, it may be necessary to enlist the services of an expert such as an appraiser.

Dividing Marital Property

In a divorce law matter, the next step after determining the value of assets is to divide marital property. While some couples can come to an agreement on their own, others may require the assistance of a family law lawyer to negotiate a settlement. However, if an agreement cannot be reached, the family court will intervene and make a determination based on a variety of factors.

In Ontario, Child, Youth and Family Services Act. the court considers a number of factors when determining how to divide property, including:

  • The length of the marriage
  • The nature of the property
  • Each party’s contribution to the acquisition, preservation, maintenance, and improvement of the property
  • Each party’s income and other financial circumstances
  • Any previous agreements or arrangements between the parties
  • Any court orders or agreements relating to spousal support

Dividing Business Assets

The division of a business can be a complex and contentious issue, especially when both parties have contributed significantly to its success. The first step is to determine the value of the business, which may require the expertise of an accountant or business valuation expert.

Once the value is established, the next step is to decide how to divide the business. One option is for one party to buy out the other’s interest, which can be achieved through lump-sum payments or a payment plan. Alternatively, the business may be sold, and the proceeds divided between the parties.

Protecting Your Property

In matters such as starting divorce or separation application, protecting your property is a crucial step. This can include taking an inventory of your assets and taking measures to secure them to prevent your spouse from disposing of or damaging them.

TCZ  lawyer Eric Zhao can ensure that your interests are protected and that your property is divided fairly and equitably under the Supreme Court of Canada family law.