What is Net Family Property?

The Family Law Act defines Net Family Property as all property acquired during the marriage by either spouse that still exists at the end of the marriage, after deducting debts and liabilities, and property, other than a matrimonial home, owned on the date of marriage.

For purposes of establishing the equalization of net family property in Ontario, there are two critical dates:

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1. The date of marriage; and

2. The valuation date (sometimes called the separation date), which ordinarily is the date when the spouses go their separate ways and there is no reasonable prospect that they will resume cohabitation.

In order to determine the net family property, each spouse prepares a Net Family Property Statement and the spouse with the higher value of net family property pays to the spouse with the lower value of net family property one half the difference between them. This payment is called the equalization payment because it is intended to equalize the value of property each spouse leaves the marriage with.

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Where the spouses have not divorced, a claim for equalization must be brought within six years from the date of separation. 

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Net family property statements can be challenging documents to complete. Given the intricacies of property division, the assistance of a family law lawyer is strongly advised. 

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Excluded Property

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There are some exceptions that allow one spouse to keep property they own. This is called excluded property. 

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Examples of excluded property include:

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• Property, other than a matrimonial home, that was acquired by gift or inheritance from a third party after the date of marriage;

• Property, other than a matrimonial home, into which a gift or inheritance can be traced;

• A settlement or an award of damages for personal injuries;

• Proceeds of a life insurance policy;

• Property that the spouses have agreed by a domestic contract is not to be included in the spouse's net family property. 

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As long as such property or income is kept absolutely separate from family assets and not used for the household and as long as it can be traced back to the property said to be excluded as at the date of separation, the value may still be excluded from the division of marital property. 

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If a spouse wishes to claim that property is excluded property, it is that spouse's responsibility to establish the exclusion with clear and cogent evidence. 

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The Matrimonial Home

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Under the Family Law Act, the matrimonial home is afforded special status. A matrimonial home brought into the marriage will not be included in a spouse's date of marriage deductions provided that it remains the couple's matrimonial home on the date of separation. Nor will a matrimonial home received as an inheritance or gift from a third party during the marriage be considered as an allowable exclusion. 

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When a marriage ends, the full value of the matrimonial home must be shared even if one of you owned the home before you were married, received it as a gift or inherited it. 

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For more information and to schedule an initial consultation, please call the office of Laura T. Settanni today.