How to divide property if you separate
When a married couple separates, each spouse usually keeps the property they own. But, they have to 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 6 years after you separate or 2 years after you get a divorce, whichever is sooner.
Equalization payment
To calculate an equalization payment, each spouse must first calculate their
In most cases, to calculate their NFP, each spouse adds up the value of their property less any debts on the day the relationship ended or their spouse died. From this, they subtract the value of their property less any debts on the day they were married.
If you own property jointly, include half the value of that property in your NFP. Your spouse includes the other half in their NFP.
If your NFP is a negative amount, your NFP is considered to be zero.
The spouse with the higher NFP then pays the other spouse half of the difference. This is the equalization payment.
For more detailed 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.
Special rules
Some assets or debts are treated differently when calculating your NFP. For example, some gifts and inheritances are not included. And all 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 of separation, they have to add the total value of the matrimonial home less any debts on the date of separation.
This means that the home’s total value is shared in the equalization payment, not just the change in its value during the marriage. This can have a big effect on the amount of the equalization payment.
Different rules apply to matrimonial homes on reserve land.
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