The act of separation and divorce comes with the required division of assets, including property. The Family Law Act in Ontario dictates that both spouses entering a separation or divorce are entitled to leave on equal footing.
As such, assets and property are to be divided to ensure both parties are granted equal footing. However, this may raise the question of whether or not a property can be transferred to an outside party to avoid a split or otherwise.
Equalization under the Family Law Act (FLA):
As noted prior, Ontario’s Family Law Act requires the fair and equal separation of assets and property. Therefore, it can be illegal and downright frowned upon to engage in any such transaction in an attempt to avoid the process of asset division known as “Equalization.” If a member of the separation or divorce were to attempt to transfer a property to a third party, this could end up escalating the legal conflict.
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For instance, in a typical divorce process, both parties of divorce undergo the Equalization process, which is a formula used to divide assets in order to provide equal footing. It’s standard practice in Ontario and fairly streamlined in the grand scheme of things.
However, if a transfer attempt were to happen, this third party could then be added to the litigation. This would naturally engage further conflict within the proceedings and add to the ongoing legal costs required throughout the process.
Net Family Property (NFP)
In Ontario, there are many ways lawyers and legal representatives are able to fight for their clients. They will ensure that a transfer of property does not go unnoticed and will ensure all assets are accounted for during the division process.
However, do note that this does not extend to assets outside of Net Family Property (NFP). Typically, most properties are subject to asset division as many are accrued during the marriage. This accounts for matrimonial homes. Though, under Ontario’s Family Law Act, there are legal exclusions. These include properties that were accumulated as gifts or inheritances, or received prior to marriage. Exclusionary properties are not subject to the same division during a divorce.
Couples filing for divorce are able to divide property in any way they wish. Though, it is often recommended to have a lawyer look over a separation agreement prior to it being finalized. This way, it’s ensured that it is fair, as changing the agreement down the road is a process on its own.
If you have any questions, please feel free to contact Shulman & Partners at (416) 661-2777. We are always more than happy to help you.