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Separation and Divorce or Death of a Spouse: Property Division

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Equalization

There are 2 main steps to calculate an equalization payment:

Step 1:

Each spouse must calculate their individual net family property (NFP). To do this, each spouse adds up the value of their property less any debts on the date of separation. From this, they subtract the value of their property less any debts on the date of marriage.

If you own property jointly, include half the value of that property in your NFP. Your spouse includes the other half in their NFP.

Here is an example:

How to calculate net family property (NFP)


Spouse A
Value of assets minus debts
 
Now (separation date) $100,000
Then (marriage date) $20,000
Now minus Then $80,000
  So NFP for Spouse A is $80,000

Spouse B
Value of assets minus debts
 
Now (separation date) $55,000
Then (marriage date) $25,000
Now minus Then $30,000
  So NFP for Spouse B is $30,000

Note: If a spouse's NFP is a negative amount, their NFP is considered to be zero.

Step 2:

The spouse with the higher NFP then pays the other spouse half of the difference. This is the equalization payment. Here is an example:


How to calculate equalization payment  
Spouse A net family property $80,000
Spouse B net family property $30,000
Spouse A minus Spouse B $50,000
$50,000 divided in half = $25,000  
Equalization payment:
Spouse A pays $25,000 to Spouse B
 

In rare situations where dividing property equally would be unfair, spouses can agree to divide property unequally. Or, a court might order it.

Special rule for matrimonial homes

A "matrimonial home" is a home that a married couple lived in just before they separated. There can be more than one matrimonial home, for example, a house and a cottage. A matrimonial home can be owned or rented.

If one spouse owns the matrimonial home on the date of marriage and on the date of separation, they do not include the home's value or any debts related to the home on the date of marriage. But they have to add the 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.

Special rule for gifts and inheritances

Any gift or inheritance that a spouse got during the marriage is not usually included in their NFP calculation as long as the spouse has the gift or inheritance at the end of the marriage. But if the gift or inheritance was used to buy or help pay for a matrimonial home, it is included in their NFP.

Special rule for Canada Pension Plan credits

These credits are not included in the NFP calculation because they are divided separately. See Canada Pension Plan credits to find out how to divide these credits.