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Explaining Equalization Of Property Calculation | Will Hutcheson, Toronto Family Lawyer  

Explaining Equalization of Property Calculation

When married spouses separate (things are completely different in this area of the law for common law spouses) there are equalization of property rules that need to be dealt with.  These rules are complex and advice from a family law lawyer should definitely be sought.

The basic rule is that spouses share the growth in their net worth from the day that they married until the day that they separated.  Thus if spouse X had $2 the day he or she married and $10 the day he or she separated, his or her growth during the marriage was $8.  If spouse Y had $0 when he or she married and $2 when he or she separated, then his or her growth during the marriage was $2.  In such a case, spouse X would owe spouse Y $3 in order to equalize their property since this would result in them both having grown in wealth by $5.  Notice that this isn’t the same thing as the spouses simply equally dividing their property.  In this simple example, spouse X now has $7 and spouse Y now has $5.

Matrimonial home exception – if the wealth that you started the marriage with was a “matrimonial home” then it does not get deducted.  Thus if spouse X’s $2 was a $2 house, then his or her growth in the above example would be counted as $10 and not $8.  Note that there are other exceptions for inheritances, gifts and legal settlements that also need to be taken into account.

Deemed 0 exception.  If we change the above example and assume that spouse Y in fact started the marriage with $4 then we see that he or she actually lost money during the marriage.  In such a case his or her growth would be counted as $0 and not negative $2.

Again, this is a complex area of law that you should get advice from a family law lawyer about.