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How will we split our assets?

What is the principle governing the division of assets?

The general rule dictates that spouses in a marriage should equally divide their assets in Ontario. The principle behind this mandated division is that both spouses likely made vital and essentially equal contributions with their time and finances to the family unit and aided in the acquisition of wealth. Therefore, both spouses should retain equal value of assets on dissolution.

What is an equalization payment?

The spouse whose net family property (“NFP”) value is less, is entitled to one half the difference between the NFP. This is called an equalization payment. Follow the guide below to first determine the NFP of each spouse, and then to calculate the amount owed to the recipient spouse.

How can you calculate the NFP and the amount owed?

Step 1: Determine the valuation day, which is the date you separated or the divorce was granted,    and list the value of assets owned by each spouse on this day for each spouse.

Determine if any of the assets constitutes an “excluded property” that does not need to be calculated as part of your NFP to be shared with your spouse. It is advantageous to have a lower NFP, so the more properties you can exclude, the more likely it is that you will be the recipient of an equalization payment. Excluded properties are:

  1. Those acquired by gift or inheritance even after marriage;
  2. Income earned from the gift or inheritance as long as long as it has been expressly declared that this property was to be excluded from NFP calculations;
  3. Property (other than a matrimonial home) acquired through the proceeds of the gift or inheritance – as long as this can be traced directly to the gift;
  4. Money received for any personal injury settlement;
  5. Proceeds of a life insurance policy;
  6. Property spouses have agreed by domestic contract not to be included in the spouse’s NFP calculation;

Step 2: Determine the total value of debts and liabilities on valuation day.

Step 3: Subtract the total value of assets, from total value of the debts to determine your final assets on valuation day.

Step 4: Determine the total value of assets on marriage day.

Step 5: Determine the total value of debts and liabilities on marriage day.

Step 6: Subtract the value of assets from the liabilities to give you total assets on marriage day.

Step 7: Subtract assets on marriage day from assets on valuation day to give you the NFP of each spouse.

Step 8: Compare the two NFPs, and subtract the lower amount from the higher amount.

Step 9: Divide the difference found in step 8 by 2.

Step 10: The spouse with the lower NFP is the recipient of half the difference of the higher and lower NFP found in step 9. See Table 1 for an example.

Table 1 – Example:

  Spouse 1 Spouse 2
VALUATION DATE: March 20, 2020
1. Assets on valuation date Car:  $25,000
Bank: $5,000
Matrimonial home: $105,000
TOTAL ASSET: $30,000
Car: $10,000
Jewellery: $10,000
Matrimonial home: $105,000
TOTAL ASSET: $20,000
2. Debts and liabilities Student loan: $5,000
Credit card: $2,000
3. Subtract asset from liability to obtain  the total assets on valuation ASSET – Liability = $25,000 ASSET – Liability = $15,000
MARRIAGE DATE: January 15, 2010
4. Assets on marriage date RRSP: $10,000
TOTAL ASSET: $10,000
RRSP: $15,000
TOTAL ASSET: $15,000
5. Debts and liabilities on marriage date Mortgage: $5,000
Mortgage: $10,000
6. Subtract asset from liability to obtain total assets on marriage day ASSET – LIABILITY =  $5,000 ASSET – LIABILITY =  $5,000
7. Subtract assets on marriage day  from assets on valuation day $25,000 – $5,000 = $20,000 $15,000 – $5,000 = $10,000
8. Subtract the amounts of each spouse $20,000 – $10,000 = $10,000
9. Divide the difference by two $10,000 / 2 = $5,000
10. Owed from spouse 1 to spouse 2 $5,000


NOTE: This article has been written for general information purposes only and does NOT constitute legal advice. For further questions and/or legal advice please consult a qualified lawyer.

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