Carrie Campbell talks The Matrimonial Home and Family Law; Divorce math isn’t always a 50/50 split

Carrie Campbell

This week, I want to explain the often misunderstood, frequently dreaded concept: The Matrimonial Home. Spoiler Alert – although I have tried to simplify the concept, if you dislike math, I expect you will dislike this column!

Each week, I will remind you that this column does not replace legal advice for your specific case; as I am not considering a particular set of facts, I will only touch on the generalities of family law. If something I explain in this column resonates with you, I urge you to consult a family law lawyer to discuss your own, unique, situation.

Now, back to the Matrimonial Home. Let me first begin by stating that a Matrimonial Home can only exist if two people are married. This particular concept does not apply to common law couples. In Ontario, the Family Law Act is the legislation that tells us how to deal with the property of two people who have been married. Many people believe that once you have married, all assets and debts are divided equally on the date of separation. Instead, the Family Law Act describes a process called “equalizing net family properties”. Essentially, we first look at what each person’s net equity was on the date of marriage. This is calculated by taking the total of his/her assets on the date of marriage, minus the total of his/her debts on the date of marriage, to determine that person’s net equity. We then go through the same calculation for the date of separation. Finally, we subtract the net equity on the date of marriage, from the net equity on the date of separation, to determine how much each person gained over the course of the marriage. The Family Law Act assumes that spouses are equal partners during the marriage, and therefore the Act requires that the increase over the course of the marriage should be equal. (There are some exclusions and exceptions that I won’t be dealing with today).

Let’s say for example that A and B are married. If Person A had $50,000 net equity on the date of marriage and $100,000 on the date of separation, we would calculate that Person A accumulated $50,000 during the marriage. If Person B only accumulated $30,000 during the marriage, Person A should pay Person B the sum of $10,000 to equalize; they would then have both accumulated $40,000 during the marriage. Then, of course, the Matrimonial Home could complicate matters. If you own a home, get married, live with your spouse in your home and then separate (while still living in the home), the Family Law Act treats the entire equity in the home as if you accumulated it during your marriage. For example, let’s assume, on the date of marriage your equity in your home was $150,000. You later separate, and on the date of separation, your equity in the same home is $300,000. Would you have assumed the home was separate property because you owned it prior to marriage? Would you have assumed you only have to share the increase in the value of the home? Neither is correct. If the Matrimonial Home on the date of separation was also owned on the date of marriage, it is treated as if you accumulated all of the equity on separation, ($300,000 in our example), during the marriage. If your spouse accumulated $0 during the marriage, you will owe your spouse $150,000 to equalize.

Here’s where it becomes bizarre. Let’s say that same person who had $150,000 in equity in the home on the date of marriage, sold the home during the marriage, and bought a different house. The new house also had equity of $300,000 on the date of separation. By simply selling the first house and buying a different house during the marriage, the person now gets to deduct the equity in the first home. The calculation is now $300,000 (equity in the home owned on separation) - $150,000 (equity in the first home owned on marriage) = $150,000. If your spouse accumulated $0 during the marriage, you will owe your spouse $75,000 to equalize, instead of $150,000 above. The difference in outcomes is due to one family choosing to move during the marriage, and the other family choosing to stay in the same home. There is truly no rationale for this difference, however, this has been our law for decades.

You should also be aware that you may have more than one Matrimonial Home – cottages and chalets will also likely be deemed to be Matrimonial Homes. As I hate to be the bearer of bad news, I will leave you with this positive note. You can protect yourself, simply by having discussions with your spouse, and drawing up a marriage contract, either before or after you are married, to set out your intentions. With over 50 percent of marriages ending in divorce, knowledge, communication with your spouse and family lawyers, are vital!

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