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Property division: Married couples

When you and your spouse separate or divorce, or when your spouse dies, you may need to divide your property. The way property is divided in Ontario depends on whether you’re married or in a common-law relationship.

Married means you had a marriage ceremony done by someone with the legal power to marry you, like a judge, justice of the peace, or religious official.

Couples who live together as partners, but have not legally married, are sometimes said to be living “common-law”.

To learn how common-law couples divide their property, read Property division: Common-law couples.

What is property?

Property is everything you own, for example, your:

  • home and other real estate
  • car and other vehicles
  • personal items, such as jewellery and artwork
  • household items, such as furniture, appliances, and electronic equipment
  • financial assets, such as bank accounts, RRSPs,
  • businesses

How to divide property if you separate

When a married couple separates, each spouse usually keeps the property they own. But, they share any increase in the value of that property that happened during their marriage.

This means that the spouse who has more property usually pays money to the spouse who has less property. This is called an equalization payment.

In most cases, the time limit to make a claim for an equalization payment is whichever comes first:

  • 6 years after you separate, or
  • 2 years after you get a divorce.

Equalization payment

To calculate your equalization payment, you and your spouse must first figure out your own net family property (NFP). Here’s how:

Step 1: List and value all your assets and debts on the date your relationship ended. This is the day you separated, or your spouse died. Then, subtract your debts from your assets. Let’s call this amount, Amount A.

Step 2: List and value all your assets and debts on the date you were married. Then, subtract your debts from your assets. Let’s call this amount, Amount B.

Step 3: Subtract Amount B from Amount A. This is your NFP. If your or your spouse’s NFP is a negative amount, it’s counted as zero.

The spouse with the higher NFP pays the other spouse an equalization payment. What they pay is half of the difference between the NFP amounts.

For example, say your spouse’s NFP is $80,000 and your NFP is $50,000. The difference between them is $30,000. Your spouse must pay you an equalization payment of $15,000.

For more information, visit stepstojustice.ca/equalization-payment.

In rare situations where dividing property equally would be unfair, you can agree to divide property unequally. Or, you can go to court and ask a judge to decide.

Special rules

Some assets or debts are treated differently when calculating your NFP. For example, some gifts and inheritances are not included in you NFP.

And Canada Pension Plan credits earned while you were together are always added up and divided equally, if you were together for at least one year.

There are also special rules about your matrimonial home. A matrimonial home is a home that you and your spouse lived in just before you separated.

If one spouse owned the matrimonial home on the date of marriage and on the date your relationship ended, the home’s total value is shared in the equalization payment.

This is unlike other assets where only the increase in value is shared. This can have a big effect on the amount of the equalization payment.

Different rules apply to matrimonial homes on reserve land.

Right to stay in the family home

Each spouse has an equal right to stay in the matrimonial home when they separate.

This applies even if only one of you own or rent it. This right lasts until one of the following happens:

  • You and your spouse make an agreement that says who cannot live there.
  • There is a court order that says who cannot live there.
  • You sell your matrimonial home or your lease ends.
  • You get divorced.

You cannot sell or mortgage the matrimonial home without your spouse’s written permission.

Debts

Each spouse is usually responsible for their own debts, unless there’s an agreement that says something else.

But if both spouses signed a loan agreement, either spouse can be responsible for the entire debt.

Written agreements

If you and your spouse want to share your property differently, you can make a marriage contract. This is also called a domestic contract.

In the agreement, you can say how you want to:

  • arrange your finances during your relationship, and
  • deal with your property and debts if you separate.

If you and your spouse have already separated but agree on how to divide property, you can make a separation agreement.

You do not need a lawyer to make an agreement. But it’s a good idea to get legal advice before signing one. You and your spouse cannot get advice from the same lawyer.

If you cannot agree on how to divide property, you can get help from a family law professional. They are trained to work with both of you to help you reach an agreement. Or they can decide for you if you cannot agree. Or, one of you must start a family law court case and ask a judge to decide.

If your spouse dies

If your spouse dies leaving a valid will, you can choose to get either an equalization payment or what was left to you in their will.

If your spouse dies without leaving a valid will, you can choose to get an equalization payment or your share according to the intestacy rules. These rules give married spouses and children the right to inherit property when there is no valid will.

In both situations, you must usually take legal steps within 6 months of your spouse’s death if you want to claim the equalization payment.

Separated spouses

If you’re married but separated from your spouse when they die, you get nothing from their estate if one of the following is true:

  • You separated on or after January 1, 2022, were separated for at least 3 years, and were still separated when your spouse died.
  • You separated and have a separation agreement, arbitration agreement, or court order that resolves all your family law issues on or after January 1, 2022.

Joint property

If your spouse dies, you usually become the sole owner of any money or property that you both owned jointly. Joint property is not affected by a will or the intestacy rules.

You also inherit life insurance money and registered investments if those assets list you as a beneficiary.

Other benefits

There are some government benefits like CPP survivor’s pension and CPP funeral and death expenses that you may be able to get if your spouse dies.

There may be other payments that depend on the cause of your spouse’s death. For example, if your spouse was killed while working, you can apply for workers’ compensation benefits.

More information and legal help

Visit stepstojustice.ca/family-law for more information. CLEO also has other family law resources.

For help finding a lawyer or a mediator, see the resource Family Law: Legal Help. It also has information on where to get help if you cannot afford the fees.

CLEO’s Guided Pathways are free online interviews that help you to fill out your family court forms. Visit guided-pathways.ca/family.