When creating an estate plan, one of the steps included is to choose a power of attorney. A power of attorney is someone you can name to make specific decisions for either your property or personal care when you are no longer capable of doing so.
Chattels Versus Fixtures
Three Types of Restricted Covenants Found in Employment Contracts
Independent Contractor vs. Employee
For many years, the distinction between an employee and independent contractor has been the centre of debate in the employment law field. The distinction comes from the similarities that both statuses have, yet employers have often chosen the standing that best suits them, especially when a business uses a blend of both types of workers.
Registered and Unregistered Trademarks
Condo Purchases and Status Certificate Review
Amending Your Last Will and Testament
Family Law Litigation Process - Part 2
In most family law cases, parties are to attend at least one of the three conferences available. These include a case conference, settlement conference and trial management conference. These conferences are provided as an opportunity to resolve all or some of the issues, which can save both parties time and costs involved in settling a case.
Family Law Litigation Process - Part 1
Trust in Real Estate Services Act
Fiduciary Duty
A fiduciary duty is the obligation of one party to act in the best interest of another party. These types of relations arise all over. They can include corporate relationships and patient-doctor relationships. In 2004, the Supreme Court of Canada released an important decision in regards to the meaning behind section 122(1)(b) of the Canada Business Corporations Act (CBCA) in regard to fiduciary duties.
Trust Basics
Family Status Discrimination
Under the Ontario Human Rights Code, childcare and family obligations are a covered ground for discrimination. This ground is called family status and is defined as being in a parent-child relationship. Within the workplace, this means that a working arrangement or policy may have an unintended effect of discrimination on the employee’s childcare obligations.
Dog Bite, Liability and Injuries
In Ontario, when it comes dog attacks, the owner is strictly liable for any injuries that may have resulted from the attack. The plaintiff does not need any proof that the dog owner was not careful or whether the dog owner should have been diligent. The plaintiff only needs to prove dog ownership, along with the severity of injuries and losses.
Buying and Selling Real Estate on the Same Closing Day
Trademark Registrability
Social Media Policies in the Workplace
Over the years, social media has become prominent in almost everyone’s lives. With the popularity of smart phones and access to internet, posting photos and writing status updates online have become second nature. In an employment setting, these social media platforms are often used to reach more customers and drive business. However, the distinction between professional and personal use can become blurry when an employee’s personal social media account does not reflect the employer’s values.
GST/HST New Housing Rebate
Test For Breach Of Confidence
Calculating Equalization
Author: Stacey Staios - Articling Student
Edited By: Ryan Carson
If a married couple decides to separate or divorce, both parties are entitled to what is called the equalization of net family property. This means that each spouse is automatically entitled to an equal share of the profits of that marriage. Barring a domestic contract between the spouses, either spouse can apply for equalization of family property under the Ontario Family Law Act (FLA).
Upon the breakdown of the marriage, in order to compensate the spouses fairly for the equal contribution during the marriage, the FLA states that the value of all assets acquired during the marriage will be divided equally. This will require one of the spouses to make an equalization payment to the other, in order to equalize the value of each spouse’s net family property. The purpose of equalization is to recognize that child care, household management and financial input are the joint responsibilities of the spouses and inherent in the marital relationship there is equal contribution.1
The first step in calculating equalization is to determine the valuation date. This date is typically the date of separation and is a fixed date, meaning there is very little discretion for the court to adjust the date. According to section 4(1) of the FLA, the valuation date is the earliest of; date of separation with no prospect of reconciliation, date of divorce granted, date of nullity, date of application for equalization due to improvidence, or day before death. In most cases, the valuation date is the date of separation.
The second step is to determine the net worth at valuation date. Once the valuation date is established, the parties must list all assets they have that would be considered property for purposes of the FLA, including any debts each party has. Some examples that would be considered property include but are not limited to life insurance, severance pay entitlements, partnership interests, future income from a trust and leasehold interests. It is important to note that professional degrees, licenses, and expectation of inheritance are not considered property for the purpose of equalization.
The third step is to determine the net worth at the date of marriage. Any assets owned before marriage are considered a deduction when calculating equalization, excluding the matrimonial home. A rule of thumb suggests that the more money you have coming into the marriage, the higher deductions you will have. The current value of the assets is irrelevant, as deductions are calculated in ‘date of marriage’ dollars.
The forth step is to calculate any exclusions in determining equalization. Any assets acquired during the marriage would be considered an exclusion. This may include property, other than a matrimonial home, that was acquired by gift or inheritance from a third party after the date of marriage. It is important for the spouse to keep their inheritance separate and have the testator (individual leaving the inheritance) specify that any income generated from the inheritance is to be excluded in such circumstances. In addition, a marriage contract entered into by the parties can state that property may be excluded, along with rights to proceeds from life insurance.
The fifth step is to determine the difference between assets on the valuation date and assets on the date of marriage for each party, then divide that number by two. This calculation gives you the net family property, and requires the party with the higher number to pay 50% of the difference to the party with the lower net family property number. The presumption at the end of the calculation is that there will be an equal division of value. However, there are cases where an unequal division of net family property will occur, meaning that there will be a variation from the 50/50 split. For example, if spouse A has calculated a net family property of $100,000, and spouse B has a net family property of $300,000, spouse B will pay $100,000 to spouse A, being 300k-100k=200k/2=100k. The court will only award an unequal payment under section 5(6) of the Family Law Act where the court is of the opinion that an equal split would be unconscionable, having regard to different factors.2 For example, if one spouse was found to be to be recklessly depleting their net family property, the court would intervene and may order an unequal payment in favour of the innocent spouse.
When calculating equalization for the purpose of net family property, it is important to pay attention to specific dates, including the valuation date, the date of marriage, and when items were received, inherited or purchased. It is also important to note section 7(3) of the FLA which sets out limitation periods for when an application can be brought forth by a spouse.3
Upon the breakdown of the marriage, in order to compensate the spouses fairly for the equal contribution during the marriage, the FLA states that the value of all assets acquired during the marriage will be divided equally. This will require one of the spouses to make an equalization payment to the other, in order to equalize the value of each spouse’s net family property. The purpose of equalization is to recognize that child care, household management and financial input are the joint responsibilities of the spouses and inherent in the marital relationship there is equal contribution.1
The first step in calculating equalization is to determine the valuation date. This date is typically the date of separation and is a fixed date, meaning there is very little discretion for the court to adjust the date. According to section 4(1) of the FLA, the valuation date is the earliest of; date of separation with no prospect of reconciliation, date of divorce granted, date of nullity, date of application for equalization due to improvidence, or day before death. In most cases, the valuation date is the date of separation.
The second step is to determine the net worth at valuation date. Once the valuation date is established, the parties must list all assets they have that would be considered property for purposes of the FLA, including any debts each party has. Some examples that would be considered property include but are not limited to life insurance, severance pay entitlements, partnership interests, future income from a trust and leasehold interests. It is important to note that professional degrees, licenses, and expectation of inheritance are not considered property for the purpose of equalization.
The third step is to determine the net worth at the date of marriage. Any assets owned before marriage are considered a deduction when calculating equalization, excluding the matrimonial home. A rule of thumb suggests that the more money you have coming into the marriage, the higher deductions you will have. The current value of the assets is irrelevant, as deductions are calculated in ‘date of marriage’ dollars.
The forth step is to calculate any exclusions in determining equalization. Any assets acquired during the marriage would be considered an exclusion. This may include property, other than a matrimonial home, that was acquired by gift or inheritance from a third party after the date of marriage. It is important for the spouse to keep their inheritance separate and have the testator (individual leaving the inheritance) specify that any income generated from the inheritance is to be excluded in such circumstances. In addition, a marriage contract entered into by the parties can state that property may be excluded, along with rights to proceeds from life insurance.
The fifth step is to determine the difference between assets on the valuation date and assets on the date of marriage for each party, then divide that number by two. This calculation gives you the net family property, and requires the party with the higher number to pay 50% of the difference to the party with the lower net family property number. The presumption at the end of the calculation is that there will be an equal division of value. However, there are cases where an unequal division of net family property will occur, meaning that there will be a variation from the 50/50 split. For example, if spouse A has calculated a net family property of $100,000, and spouse B has a net family property of $300,000, spouse B will pay $100,000 to spouse A, being 300k-100k=200k/2=100k. The court will only award an unequal payment under section 5(6) of the Family Law Act where the court is of the opinion that an equal split would be unconscionable, having regard to different factors.2 For example, if one spouse was found to be to be recklessly depleting their net family property, the court would intervene and may order an unequal payment in favour of the innocent spouse.
When calculating equalization for the purpose of net family property, it is important to pay attention to specific dates, including the valuation date, the date of marriage, and when items were received, inherited or purchased. It is also important to note section 7(3) of the FLA which sets out limitation periods for when an application can be brought forth by a spouse.3
Articles written by Stacey Staios:
Testamentary Capacity Aggravated and Punitive Damages Leaves of Absence in Ontario Co-Parenting In The Age of a Pandemic Corollary Relief Disability Accommodation in the Workplace
Estate Planning: A How To Guide Should You Consider A Cohabitation Agreement? What Is Wrongful Dismissal?
Disclaimer
The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this web site are advised to seek specific legal advice by contacting members of Carson Law, Carson IP, or their own legal counsel regarding any specific legal issues. Carson Law does not warrant or guarantee the quality, accuracy or completeness of any information on this web site. The articles published on this web site are current as of their original date of publication, but should not be relied upon as accurate, timely or fit for any particular purpose.
References
1 Family Law Act, s.5(7)2 Family Law Act, s.5(6)
3 Family Law Act, s.7(3)