Splitting up Money and your Home
By John T. Syrtash, Associate, Garfin Zeidenberg LLP, a Toronto family law lawyer for the past 39 years (see www.freemychild.ca).
Question: I understand that if I were to marry and then get divorced, the equity in my present home could be split 50/50 in the absence of a prenup or marriage contract that provides otherwise. However, if I were to sell my house before marrying, bank the money, buy a house together, and then get divorced, would my wife be entitled to half the money in my bank accounts or just half of the home’s equity bought together?
Answer: The house that you bought together is the principal asset that would be divided upon separation and divorce, but not the money you had in the bank on the date of marriage. However, depending on your wife’s net worth when you separate, the increase in the value of your funds from the date of marriage until the date of separation (not the date of divorce) would also be subject to division (equalization). To illustrate, if you had $100,000 in the bank on the date of marriage, and, through wise investment, this $100,000 grew to $180,000 by the time you separated, then the $80,000 increase could be subject to division upon separation, but the original $100,000 that you brought into the marriage, would be safe from division (equalization).
By contrast, the equity of the home you owned before marriage is deductible from any property division calculation unless you continue to live in that home with your spouse on the date of separation. In short, if you owned any real estate then the value of your equity in that property can be deducted from your net worth before equalization. However, say you bought some realty many years before the marriage and your equity back then was $300,000. You then get married, live in that same home for 30 years, and then separate from your spouse. On the date of separation that home has now increased in value to $1,300,000 Believe it or not, under Ontario law the entire equity in the home, including its increase in value before you got married, is included for division, not just its increase in value from the date of marriage. This means that the entire equity of $1,300,000 is subject to be split 50:50 even though most of the equity increased before you even met your spouse! Why? Ontario law considers the matrimonial home to be sacrosanct and subject to equal division, especially if you’ve resided together for more than 5 years. The solution: get a prenup called a marriage contract that should be prepared by competent family law Counsel. However, ensure that you have proof to have exchanged complete and full financial disclosure, including copies of tax returns, Notices of Assessment, and documentary proof, including valuation of any business you may own. Otherwise, the marriage contract may not help you.
John Syrtash is an associate and family law lawyer with the Toronto firm of GARFIN ZEIDENBERG LLP.
John T. Syrtash B.A. (Hon.) LL. background:
Invited Speaker on Bill 78, Proposed Changes to Canada’s
Divorce Act, House of Commons Standing Committee on Justice and Human Rights (November 26, 2018)
Editor of the Syrtash Family Law Newsletter, Lexis Nexis
President of the Syrtash Spousal Support Database
Author of Religion and Culture in Canadian Family Law, Butterworths
Author A Calendar of Northern Fables, Amazon
Neither GARFIN ZEIDENBERG LLP nor John Syrtash is liable for any consequences arising from anyone’s reliance on this material, presented as general information and not as a legal opinion.
John T. Syrtash, Associate
GARFIN ZEIDENBERG LLP
5255 Yonge Street, Suite 800
Toronto, Ontario, Canada M2N 6P4
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