Division of property entails both personal property and real property and includes such things as the matrimonial home and any other real estate, cars or any other vehicles, jewelry and other personal items (such as clothing and books), household items (such as furniture and appliances), bank accounts, RRSPs, pensions, any other investments, and business interests.
When a married couple is separating (or getting a divorce), the division of their property is governed by the Family Law Act, which generally states that any increase in net worth during the time the parties were married should be shared by both spouses. This division is referred to as an “Equalization of Net Family Property”.
In order to determine the Equalization of Net Family Property, each party must first determine what their Net Family Property (NFP) is. It is important to know that, when calculating a party’s NFP, there are special rules that apply to the date of marriage assets and debts, the matrimonial home and gifts and inheritances. It is a somewhat complicated process involving various calculations, data, and valuations.
While all married couples that are separating are entitled to an Equalization of Net Family Property, it is important to be aware that there are certain limitation periods.
It is important to note that equalization of net family property applies only to married couples.
When dealing with property issues between couples that were never married, the concept of Equalization of Net Family Property is not applicable. The general rule is that couples who have only been cohabitating keep the property that they brought into the relationship as their separate property, although the parties will still need to address property purchased together during the relationship. However, one needs to be careful as there are available arguments one can make for a share of the other party’s property (such as “unjust enrichment” or “constructive and resulting trust”).