Equalization Payments & The Matrimonial Home
The division of property is one of the biggest issues in the break-up of a relationship. What many people are unaware of, however, is that the way property is divided depends on whether or not a couple is legally married. Married couples automatically share the value of their property if they separate or if one spouse dies. Common-law couples, however, are a different story and do not automatically share in the value of the property.
When a couple goes through a divorce, they go through a division of their property and essentially divide in half all of the assets that accumulated during the marriage. Each spouse calculates their net assets on the date of the marriage and then again on the date of the separation. The difference is known a person’s net family property. Whichever spouse has the highest net family property then makes a payment to the other spouse to even out the amounts. This is called an equalization payment.
A “matrimonial home”, also known as the family home, is the home in which a legally married couple were living at the time of their separation. A couple may have more than one matrimonial home, such as a cottage or vacation home.
It is important to note that each married spouse has the right to stay in the matrimonial home until it is sold or until there is a court order. This is the case even if the property is registered on in the name of one spouse.
The matrimonial home occupies a special place in family law and is not treated the same as other assets. For example, let’s say one spouse owns a home at the date of the marriage. The other spouse then moves into that home and it becomes the family home. The couple still lives in that home at the time of their separation. When net family property is calculated, the spouse who owned the home cannot claim it as an asset that he or she had on the date of the marriage. However, that spouse must claim the entire value of the home on the date of separation, not just the change in value over the course of the marriage. This can have a major effect on a spouse’s net family property and can seriously impact how big the equalization payment will be and who will pay it.
If you have questions about your divorce or separation, please contact family lawyer Jason P. Howie, online or at 519.973.1500.