How To Calculate the Equalization of Property in a Divorce
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How To Calculate the Equalization of Property in a Divorce

[Music] How is the equalization of property calculated
in Ontario upon divorce? Hi, I’m Brian Galbraith, I’m the owner of
Galbraith Family Law Professional Corporation. We’re a law firm of divorce lawyers with offices
in Barrie, Orillia, and Newmarket. The calculation of an equalization payment
is based on a formula. Basically, the formula is this, the assets are calculated for both
parties on the date of separation, you subtract from that the debts on the date of separation
in each person’s name and then you subtract any assets or debts that each person had on
the date of marriage because you’re sharing the increase in wealth during the course of
the marriage. Lastly, exclude any excluded assets such as gifts, or inheritances or proceeds
from a personal injury that are still in existence on the date of separation and are in a discrete
piece of property or account, so it’s kept separate. That determines each party’s net
family property number and then those numbers are equalized by way of a payment of money. Let me give you an example here. In this example
here’s the husband’s column, here’s the wife’s column, they jointly own the home, it’s worth
$400,000 so since it’s jointly owned it’s $200,000 for each. They each have their own
RSPs, it’s $50,000 for him, $20,000 for her. They each have a car, his is worth $30,000,
her’s is worth $10,000. That’s their assets on the date of separation $280,000 versus
$230,000. That’s the first step, the second is you have to subtract the debts as of the
date of separation. There’s a mortgage it’s 50/50 and it’s $100,000 in total so it’s shared
between the two of them equally 50/50. He has a car loan of $10,000 on his car so that’s
down here and then the taxes on the RSP, in this case estimated them to be 20% depend
on the circumstances what you’d estimate them to be. In this case, there’s debt for the
husband of $70,000 and $52,000 for the wife, that’s going to be subtracted from the assets
on the date of separation. The next step is, to look at what was owned
by each of them on the date of marriage, he owned a $40,000 car with a debt of $30,000
on it, so he gets to deduct $20,000. She had a $50,000 car with a $30,000 debt, she gets
to deduct $20,000 because that’s what each had on the date of marriage. Then the last is excluded property, and in
this case the husband was given a gift of money which he used to purchase the car, the
car is still in existence on the date of separation it was kept in his name, so he gets to deduct
$20,000 in this case the wife had nothing that she could deduct. Now you just do the calculation. Assets on
the date of separation $280,000 for the husband, his debts were $70,000 he brought into the
marriage $10,000 and he had excluded assets of $20,000 so his net family property is a
$180,000. Doing the same calculation for the wife, her’s is $158,000. Obviously, if things
were left they way they were on the date of separation, he would leave the marriage with
$22,000 more in assets than her. Ontario Family Law Act says that those numbers should be
equalized. Lets see the calculation. There’s the husbands
net family property $180,000 the wife’s is a $158,000 so the difference is $22,000. To
equalize that, the husband has to pay to the wife so the husband pays the wife $11,000
that results in each party having net family property after the separation is completed
of $169,000. That’s equal so that’s what the Family Law Act divides up property. Each person
leaves with the property that’s in their own name and debts that are in their own name,
but by this process the accumulated value during the course of the marriage is equalized. Some of the issues that arise are what are
what is the fair market value of particular assets? Do you have any proof of the value
of an asset? Do you have any proof of the debt? What were the assets of the day of marriage?
Can you prove that? Often times there is no documentation to prove the assets or debts
that were owned on the date of marriage. What we do is, we do this sort of calculation everyday,
our family law lawyers have a great knowledge of how the courts are deciding these sorts
of situations, so we can help you do this calculation for your family and determine
what the equalization payment would be. Sometimes clients will actually choose to trade assets
so that they don’t actually have to make an $11,000 payment, they would just say, “Look,
you get more of my RSPs, we’ll roll over more of RSPs into your name,” and you can do that
on tax free basis, or they might transfer, switch vehicles so that it ends up that this
calculation is roughly close to equal. Remember, this calculation is what the judges do if
your matter goes to court, but you can negotiate whatever agreement works for you and for your
family. If this video has been helpful, give it a
thumbs up or like it, maybe share it with a friend. The next step for you would be to
book a consultation with one of our lawyers so that we can help you look at your obligations
and rights according to the Family Law Act and other legislation. The best way to do
that is to go to our website which is and arrange to book a consultation with one
of our lawyers in Barrie, Orillia or Newmarket. I hope this has been helpful. [Music]

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8 thoughts on “How To Calculate the Equalization of Property in a Divorce

  1. in this example does the wife need to claim that 11000 as an income taxable or not my question is should it be declared as far as CRA is concerned

  2. what if they stole thousands of dollars out of the account beat the crap out of you and tried too kill you and the doc seen your neck, he flared my illness so bad i could barley get to the bathroom by time he left and many were concerned i would not be able to look after myself what about wife support, what about looking after property and paying everything since time he left so many questions :(( he is doing me over bad I need help, he was confirmed with chronic depressions but since we got married 29 yr ago he stopped touching me and yrs he kept me trapped so I could not drive or have a phone, I do not know what to do if you can help I'm I'm omemee, [email protected] I even could not trust my first lawyer as she was mc related I had to drop her and she wrote a bad report on me I'm getting nowhere it has been a year now!! nov 1st and the police took him out please help

  3. what if the date of marriage and date of separation is the same and never lived together? lived on different addresses with the intention to live together later on but ended up to divorce with an a year.?

  4. What they don't tell you all is if you own your own home (without spouse on title) and the home is deemed to be the matrimonial home, the spouse gets a large portion, often at least half, after a short period of cohabitation; unless a pre-written agreement is in place. This is an important detail that the lawyers tend to leave out.

    It's going to take a little more than this video to convince me divorce is equal in this country. Just look around people….who gets alimony? (in practice not theory) Who gets the kids 90+% of the time? (and the support that goes with them) Ever hear of someone having to give equalization to keep a 20k purse collection? nope. A 20k Harley? you betcha. How about a 50k wardrobe? nope. A 50k speedboat? you betcha. 10k in shoes? nope. How about a 10k sled or quad? you betcha.

    "You keep your clothes, I'll keep mine, we'll split the Harley, the boat, the quad…."

    No mention of gender in this comment at all. Why is it so clear who is who in the matter? They make two equal piles, and the "preferred spouse" gets both of them.

    Don't let the lawyers entice you to go in with your guard down. It's like a tire salesman encouraging you do do burnouts with your car…..

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