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While Ontario’s family law system follows a principle of equal division, it doesn’t mean a 50/50 split is guaranteed. If you’re going through the separation or divorce process, it’s important to understand how family property, equalization payments and debts are managed.

To start, let’s define what family property is. In Ontario, net family property refers to the assets that you and your spouse have accumulated during your marriage. This can include things like the family home, bank accounts, pensions, businesses and more.

The first step in the equalization process is calculating each spouse’s net family property (NFP). This represents the monetary value assigned to each party based on the total assets and liabilities accumulated during the marriage. All assets and debts acquired during the marriage are included in the NFP calculation, except for gifts or inheritances received after the marriage date that are kept in the recipient’s individual account. Your lawyers will use the date of your marriage and the valuation date to determine your NFP value. The valuation date is the date at which you and your spouse separated. If the parties can’t agree on this date, the court may decide based on witness testimony, the couple’s public status and other relevant factors.

To ensure a fair division of assets, Ontario’s family law system utilizes equalization payments. The goal of the equalization process is to balance the value of family property between both spouses. The equalization payment is determined through several steps. First, the NFP of each spouse is calculated. Then, the difference between the spouse with the higher NFP and the one with the lower NFP is determined. This difference is divided in half, which becomes the equalization payment. The spouse with the higher NFP is then required to pay this amount to the spouse with the lower NFP. It’s important to note how the matrimonial home is treated in law; even if the matrimonial home is owned at the date of marriage or gifted or inherited after the date of marriage, its entire value is included in net family property for the purpose of determining the equalization payment, unlike other assets. If the couple cannot agree on the payment, the court may intervene and make the decision for them. Once the amount of the equalization payment is determined, the couple decides how it will be paid, which may involve transferring assets or making a cash payment, or a combination of both. 

Factors like a pre-nuptial agreement or marriage contract can also outline how property will be divided, often before the marriage begins in accordance with the spouses’ wishes, and may not result in a 50/50 split.

What happens when there’s debt? Your net family property value is determined by subtracting your debts from the total value of your assets. According to the Ontario Family Law Act, debts are not divided like assets. Spouses are not responsible for each other’s individual debts incurred before or during the marriage, unless they co-signed joint debts. Debt remains with the person legally responsible for it, and they can deduct it from their NFP calculation. Any debts that were jointly shared by spouses during the marriage will be divided equally. Joint debts eligible for equalization include credit card debt, remaining mortgage balances, car loans and similar obligations.

Lastly, in rare cases, a court can step in if the equalization process is deemed unconscionable. This means that if the division of property or the equalization payment would lead to an unfairly harsh result for one spouse — such as extreme financial hardship — the court may decide to adjust the division. This is not common and typically only occurs in situations where one spouse has tried to hide assets, has been abusive, or has acted dishonestly during the process.

While a 50/50 split isn’t automatically guaranteed, Ontario’s family law system strives to ensure that the division of assets and debts is fair and just. If you’re going through a divorce or separation, it’s important to understand how property is categorized, how equalization payments work, and what role debts play in the process.