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Many of my clients have expressed concern about how best to protect their or their child’s interest in a matrimonial home.  The Family Law Act (Ontario) (the “Act”) is the basis of this concern. The Act aims, in part, to achieve an equal division of property acquired during marriage between legally married people when a marriage dissolves or the first spouse dies.  The Act uses a formula to calculate the total value of property or “net family property” (“NFP”) acquired by each spouse during the marriage.  The spouse with the lesser NFP is entitled to claim from the other spouse one-half the difference between their respective NFP values.

Certain assets do not have to be added to a spouse’s NFP value, such as gifts and inheritances received from a third party after the date of marriage, income from such gifts and inheritances if the donor excludes it in writing, life insurance proceeds, property acquired with these assets and property excluded by domestic contract.

A matrimonial home is a property used by spouses with or without their children as a family residence.  A couple can have more than one, including cottages.  The Act requires the value of a matrimonial home (not the property itself) net of debts, which was owned by one spouse at the end of the marriage to be added to that spouse’s NFP calculation.  Any gift or inheritance used to purchase a matrimonial home, make improvements to it or pay a mortgage on it must also be added to the spouse`s NFP calculation.

On death, the surviving spouse may choose to either take any gifts to them in the deceased spouse’s will (or under provincial law if there is no will) OR make an NFP equalization claim. The deceased spouse’s estate cannot claim an equalization payment.

With certain exceptions, parties may plan and use domestic contracts to replace the default formula for property division under the Act.

For further information about how to protect your marital property, please contact Andrea P. Kelly.


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