When legally married spouses separate with no reasonable prospect that they will resume cohabitation, the spouse whose net, financial worth is less than the other is likely entitled to an “equalization” payment.
An equalization payment is intended to balance and account for the inherent joint responsibilities, whether financial or otherwise, the spouses shared during the marriage, pursuant to sub-section 5(7) of Ontario’s Family Law Act (the “FLA”).
The separated spouse whose net worth accumulated during the marriage is less is generally to one-half the difference of the spouses “net family properties”, pursuant to sub-section 5(1) of the FLA.
Net family property means the value of all the property, except property under sub-section 4(2) of the FLA (“excluded property”), that a spouse owns on the valuation date (or “date of separation”), after deducting the spouse’s debts and other liabilities and the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage.
Usually, a spouse that is separated or divorced would make a claim for equalization when they make an Application (Form 8) in the Superior Court of Justice.
Notably only married spouses are entitled to claim equalization against the other.
Equalization is a unique property claim that the sub-section 5(1) of the FLA confers to married couples exclusively - it is a personal right.
An equalization claim is different from other property rights to which a person may be entitled otherwise upon a separation or divorce, arising from joint ownership, shares in a business or title to real property.