Divorce is not something that happens overnight. Spouses might spend months or years fighting, reconciling, seeking counseling and living in limbo before someone ultimately files the necessary paperwork to end the marriage.
Thus, it may not always be clear when spouses actually separate. However, this date could prove to be critical when it comes to equalizing net family property in Ontario.
A critical date
When you divorce, Ontario laws dictate that spouses equally share the increase in their wealth that they accumulated during the marriage. It follows that the person whose net worth increased more than the other, will be required to make an “equalization payment” to the other party.
For asset division purposes, speaking now in very broad and general terms, the eligible property includes pretty well anything a spouse collects after the date of marriage and until the date of separation. Rest assured that there are exceptions to this general rule. One such exception is gifts or inheritances that a spouse received from a third party after the marriage date where that gift or inheritance is kept segregated.
So, imagine that you come into a financial windfall, or you make a business deal that nets you a hefty sum of money. If these events occur before the date of separation, these assets can be eligible for being included in your “net family property”. If such events occur after the separation date, then they can be shielded from the equalization of net family process.
Ways to establish separation
In some situations, the date of separation is not up for debate. Parties could agree it was the date one spouse moved out or on the day they had a direct conversation about ending the marriage. The key to keep in mind here – there must be no reasonable prospect that cohabitation will be resumed.
However, there are plenty of scenarios where the date of separation is unclear, particularly if parties continue to reside under the same roof.
Under these circumstances, you might determine the date of separation by reviewing texts or emails where one party says definitively that the marriage is over. Friends and family could have helpful insight into the timing. You might also consider the date when one spouse starts sleeping in another room. But each case is different. And you can imagine that there are stacks of case precedents as spouses jockey for position while they keep their eyes on really good or really bad transactions that took place during that grey zone.
To prove the date of separation, you can collect evidence, such as:
- Written correspondence
- Photos of the home and separate living conditions
- Lease agreements
- Bank account records
- Receipts that show separate payments for utilities, phone bills and groceries
- Statements from friends and family
The divorce process is not always as black-and-white as parties might prefer it to be. There is often considerable room for negotiating, debate and interpretation, which is why divorcing spouses would be wise to approach these matters thoughtfully and with legal guidance.