Common Law Spouses and Property Division in Ontario

Common law couples do not have the right to seek an equalization of family property under current Ontario legislation – this fact cannot be overstated.  As discussed in a previous post by my colleagues:

Division of property is dealt with in Part I of the Family Law Act. When married couples separate, generally speaking they are entitled to divide their property equally between the two spouses, regardless of who legally owns the property.  Under the Family Law Act, “spouses” are entitled to divide their property on the breakdown of the marriage. “Spouse” is defined as either (1) two people who are married to each other, or, (2) two people who entered into a marriage that is either void or voidable, in good faith. It does not include “common law couples” – even couples who have lived together for more than least 3 years, or are living together and are the parents of a child. So, what does that mean exactly? It means that common law couples cannot look to the Family Law Act to make a claim to a share of property that they do not own.

Though common law partners in Ontario who are separating cannot look to the Family Law Act to claim a share of the property owned by their spouses, they may be able to make an indirect claim for a share of those assets by establishing a claim for unjust enrichment, which is defined as receiving a benefit by another person, without offering reimbursement in circumstances where reimbursement is reasonably expected.

The Supreme Court of Canada in Kerr v. Baranow [2011] 1S.C.R. 269 clarified the application of unjust enrichment in the family law context.  Generally to establish a claim for unjust enrichment, the claimant must prove that:

1.     The defendant spouse has been enriched by the spouse making the claim;

2.     The claiming spouse has suffered a corresponding deprivation; and

3.     There is no juristic reason for the enrichment.

If this test is met, the claimant spouse has established that he or she has been unjustly enriched by the defendant spouse.   The court then has to determine which remedy it will apply as a result of the unjust enrichment.   In Kerr, the court indicated a strong preference for monetary remedies in unjust enrichment cases.  However, the court indicated that, in some cases, a constructive trust remedy may be more appropriate.    The topic of constructive trust – what it is and how it can be established – will be explored in a future posting.

A monetary remedy is often granted where the unjust enrichment is characterized as an unjust retention of a disproportionate share of assets accumulated during the course of a “joint family venture” to which both partners have contributed.   This means that where a joint family venture is found and there is a link between the contributions of the party claiming the unjust enrichment and the accumulation of wealth, the remedy for the unjust enrichment should be calculated on the basis of the share of those assets proportionate to the claimant’s contributions.

What exactly is a “joint family venture”?  To determine whether a joint family venture is present, the court will analyze the evidence of the parties’ relationship to determine how it fits into the four factors:

(a) mutual effort,

(b) economic integration,

(c) actual intent and

(d) priority of the family

It should be noted that making a successful claim for unjust enrichment can be a lengthy, arduous and expensive process, as the proof required to establish the claim is often extensive.  Unjust enrichment cases tend to be fact-driven which can lead to a great deal of uncertainty about the proper entitlement of a claimant spouse.  Such uncertainty can cause difficulty for parties trying to resolve cases before trial. 

Although the unjust enrichment/ joint family venture analysis provides a legal avenue through which common law couples can seek compensation for their contributions to a marriage-like relationship in some cases, the process is generally much simpler for married couples, who can rely on the equalization scheme contained in the Family Law Act. 

Some provinces, such as British Columbia, have made legislative changes to allow common law couples the right to the division of property upon separation. 

Until Ontario adopts similar legislation, common law couples in this province should bear in mind that they have no legislated right to make a claim to a share of property that they do not own.

- Michael D. Heikkinen for abblaw.ca


[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]

Spousal Support Formulas: The Basics

Determining Factors for Spousal Support Entitlement

The Supreme Court of Canada in Bracklow v. Bracklow identified three bases for spousal support entitlement: contractual, compensatory, and non-compensatory, Contractual support would be support based on any agreement that existed between the parties. Compensatory support is meant to reimburse the spouse for choice’s they made during the marriage that required them to sacrifice professional success in favour of the marriage. Non-compensatory is based on the need of the spouse, determined according to the economic interdependency created during the marriage. The longer the marriage, the greater the amount of interdependency, and the longer that may be required to unravel it.

Formulas

There are generally two different methods used to determine both the amount and duration of spousal support: the with child support formula, and the without child support formula. Regardless of the formula applied, both calculations originate from s. 15.2 of the Divorce Act. The Divorce Act sets out, that in making a spousal support order the Court shall consider the means needs and other circumstances of each spouse including:

(a) the length of time the spouses cohabited;

(b) the functions performed by each spouse during cohabitation; and

(c) any order, agreement or arrangement relating to support of either spouse.

These considerations are further supplemented by s. 33(9) of the Family Law Act which provides a long list of considerations to be made when the court is addressing both amount and duration of spousal support. The Court weighs these issues in light of the objectives of spousal support, which the Divorce Act sets out as follows:

(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

 

The Spousal Support Advisory Guidelines (“SSAGs”) set out two formulas and the method for determining the amount and duration of spousal support.

While the SSAGs do not need to be strictly adhered to, and contain several exceptions, they have become a valuable tool for the courts in determining duration. In fact, the Ontario Court of Appeal in Fisher v. Fisher held that when Judges deviate from the SSAGs, after being referred to them by counsel, they must provide a reason as to why the SSAGs should not be relied upon.

In the SSAGs, calculations regarding the duration of spousal support rely heavily on the duration of marriage. The amount or ‘quantum’ of support is calculated differently based upon whether child support is being paid.

 

The Without Child Support Formula

The without child support formula proposes two occasions when a spouse is entitled to indefinite support. First, when the marriage has been 20 years or longer in length. Second, indefinite support may be awarded where the marriage has lasted five years or longer if the years of marriage plus the age of the support recipient at the time of separation equals or exceeds 65. This is known as the “rule of 65”. Indefinite support does not mean permanent support; it simply means that there is no set date of termination.

When the situation does not fit one of these two scenarios, the duration is generally within the range of, at minimum, half the length of the marriage and, at a maximum, the entire duration of the marriage.

In regards to amount, it ranges from 1.5 to 2 percent of the difference between the spouses’ gross incomes for each year of marriage, up to a maximum of 50 percent. For marriages of 25 years or longer the maximum percentage that will be granted is between 37.5 and 50 percent.

The With Child Support Formula

The Guidelines establish that any initial orders when a spouse is also receiving child support should be indefinite. The SSAGs simply suggest that the original order not have an end date but allow for it to be established subsequently. To do this, the Guidelines further include a duration with an upper and lower limit. The minimum being the longer of one half the length of marriage or the date the youngest child starts full time school and the maximum being the longer of the length of the marriage or the date the last or youngest child finished high school.

Under the basic calculation of this formula, the amount is based on a spouse’s individual net disposable income (INDI), which for the paying spouse is essentially their income after removing child support and taxes. The recipient’s spouse’s INDI is their income adjusted for child support, taxes, and, government benefits. The spousal support amount is then calculated based on the recipient spouse receiving between 40 and 46 percent of the spouses’ combined INDI.

How these factors are to be assessed in determining the amount and duration of spousal support will always be a matter to be determined by a judge. A properly prepared and experienced lawyer will have the knowledge to explain the situation to a court in a thorough and persuasive manner regardless of the type of spousal support order being sought.

— Daniel Pinsky for abblaw.ca

[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]

Wills & Estates: Dual Wills

It is becoming increasingly common for lawyers to discuss or recommend to clients to have two wills prepared if the testator has a substantial investment in one or more private companies .

This plan involves having one will to govern the estate assets that require probate and a second will to govern those estate assets that do not require probate. The customary objective is to achieve a significant savings in Estate Administration Tax.

Usually the will that governs the assets requiring probate is called the “Primary Will” and is signed first, and the will that governs the assets that don't require probate is called the “Secondary Will” and is signed immediately afterwards.

Assets that can usually be dealt with without the necessity of a formal grant of probate by the court include things like shares in a privately held corporation, partnership interests, beneficial interests in a trust, unsecured debts, and household goods and personal effects except for those that are specifically dealt with under the primary will.

Sometimes even real property can be transferred without probate. This usually includes lands where the title is still registered under the Registry Act, or on the first dealing with lands being converted from the Registry Act system to the Land Titles system.

If you are dealing with a specific parcel of land in the Secondary Will, you should consider having a fall back provision in the Primary will in case the property ultimately cannot be dealt with without probate.

Dual wills however should not necessarily be used automatically in every case where the testator has shares in a private company. There are a number of important considerations and potential problems in using dual wills.

It is important that they be signed in the proper order and that the revocation clause set out in each will be different and properly worded. Otherwise, one of them might inadvertently revoke the other.

If different estate trustees are appointed there could be some overlap or dispute about their respective responsibilities. You might want to be more specific about the division of responsibilities than you would in a case where you only have one will. For example, which estate trustees are going to be responsible for preparing and filing income tax returns? In the event of a conflict or dispute which trustees would have the ultimate decision-making authority?

If there will be a beneficiary designation in the will(s), for life insurance, RRSP,RRIF, TFSA etc, it is generally better to put these in the Primary will because if they are in the Secondary will and prove ineffective that could taint the Secondary will and could result in having to pay Estate Administration Tax on the whole secondary estate.

If there are different beneficiaries, and especially if there are different residual beneficiaries, you should consider carefully which Estate is to pay which debts and taxes on which properties and assets. This might include income tax on RRSP’s, RRIF’s and capital gains tax on taxable property.

Again if there are different beneficiaries and the possibility that there will not be enough in the estate, or the residue of the estate to satisfy all debts, taxes and legacies, consider setting out specifically who is to bear these charges and which legacies will be reduced in what order or by how much.

Lastly, we recommend that you avoid using a codicil(s) to amend dual wills. There is a risk of an unintended revocation because a codicil effectively republishes the will it refers to as of the date of the codicil. With modern will drafting technology it is generally simple enough and more prudent to prepare complete new dual wills.

Anyone with a substantial investment in a private company or other assets that might not require probate should consider making dual wills and should obtain sound legal advice before doing so.

It is important to understand the advantages of dual wills, but also to be aware of the special pitfalls and problems they can create. They are not necessarily appropriate in every case just because the testator has a private company.

— Craig M. Bater for abblaw.ca

[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]

Equalization Claim by a Surviving Spouse

The Family Law Act (the Act) makes provision for an equalization claim by a surviving spouse. Section 6(2) of the Act allows a surviving married spouse (i.e. not a common law spouse) to elect between his or her succession rights under a will and his or her equalization claim under the Act.

For example, a husband dies and leaves an estate worth $2,100,000.00. In his will he leaves a bequest of $100,000.00 to his wife and the balance of his estate to his secretary. The surviving wife has a period of 6 months from the date of death to file her election if she wishes to make an equalization claim under the Act. In order to determine what is most beneficial for the surviving spouse she has to make a calculation of the value of her equalization claim. In order to make that calculation the surviving wife has to determine her Net Family Property (NFP) and the NFP of the husband. This requires knowing the values of all assets and debts of the parties at the date of marriage and at “valuation date”.

To continue with our example lets assume that that at the date of marriage they had no property. At “valuation date” the husband had $2,100,000.00 and the wife had $1,000,000.00 in net assets. [Note: In the case of a separation “valuation date” is the date of separation. In the case of an equalization claim following a death “valuation date” is the day before death]. Based on the facts set out above the surviving wife’s equalization claim would be ($2.1M - $1.0M = $1.1M / 2 = $550,000.00). Based on those facts, it would be financially advantageous for the wife to make an election to make an equalization claim (worth $550,000.00) rather than take her bequest under the will.

If the wife made the necessary election within the 6 month time limit, her right to an equalization claim would have priority over bequests in the will and dependents relief claims (other than dependent relief claims by the deceased’s children).

Recent statutory amendments have clarified the credits which are to be made against a surviving spouse’s equalization entitlement. The credits listed are as follows:

a) Benefits payable to the spouse pursuant to a life insurance policy on the life of the deceased spouse;

b) Lump sum benefits payable to the spouse pursuant to pension or similar plan payable as a result of the death of the deceased spouse; and

c) The value of property or a portion of property to which the surviving spouse becomes entitled by right of survivorship on the death of the deceased spouse.

So, in the example above, if the wife was, together with her husband, the joint owner of a home which had equity of $1.1M she would receive a benefit of $550,000.00 by way of survivorship. This “credit” would eliminate her equalization claim. In this circumstance the wife would be advised to take the said survivorship interest and the bequest under the will.

It quickly becomes apparent how complicated these sorts of cases can become. In real cases this complexity is often magnified by the difficulty in getting the necessary financial disclosure to make the necessary calculations in a timely fashion. Anyone considering making an election pursuant to the section 6(2) of the Act should obtain good legal advice and should do so as soon as possible.

- Philip W. Augustine for abblaw.ca

[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]

To Be or Not To Be (Married)

Introduction

Today, more couples are choosing to live together in a relationship resembling marriage, without the formalities of marriage. There are many different reasons why a couple may choose not to get married; however, just as choosing to get married has legal implications, so does choosing not to get married. One of the most notable legal implications of not getting married relates to the division of property when the relationship breaks down. So, if you make the decision not to get married, do you really know what you are (not) buying into?

Division of Property for Unmarried Couples

Division of property is dealt with in Part I of the Family Law Act. When married couples separate, generally speaking they are entitled to divide their property equally between the two spouses, regardless of who legally owns the property.[1] Under the Family Law Act, “spouses” are entitled to divide their property on the breakdown of the marriage. “Spouse” is defined as either (1) two people who are married to each other, or, (2) two people who entered into a marriage that is either void or voidable, in good faith. It does not include “common law couples” – even couples who have lived together for more than least 3 years, or are living together and are the parents of a child. So, what does that mean exactly? It means that common law couples cannot look to the Family Law Act to make a claim to a share of property that they do not own. Let’s look at an example:

Jack and Jill have been living together for the past 15 years. They are not married. They live in a quaint house owed by Jill that they both spent time furnishing, decorating and renovating. They have two cars. Both vehicles are jointly owned. Jack and Jill each have their own chequing account. They also have a joint savings account in which they both deposit money to save for a vacation. Jill has a fairly substantial pension with the federal government. Jack only has a modest RRSP. Jack was never worried about his retirement because he knew Jill had a large pension that could support them both. They never had any children. Suddenly, Jill tells Jack she is no longer happy and wishes to end the relationship.

Dividing Jack and Jill’s Property

When common law couples break up, lawyers look to the title, or ownership of the property to determine how it will be shared. If the title is held jointly, the parties can share the value of the asset equally. If the title is held by only one person, only that person is legally entitled to the asset, with only limited exceptions.

What Jack and Jill Can Share

Jack and Jill will be able to share in the value of both vehicles, as well as the joint savings account. This is because these assets are held jointly. Both parties are automatically entitled to share in the value of those assets.

What Jack and Jill Can’t Share

Jack and Jill would each keep their own bank accounts. Unfortunately for Jack, the title to the house is in Jill’s name alone. While Jack and Jill have been living in the house together for the last 15 years, and both put time and money into renovating and decorating the house, Jack has no automatic entitlement to half the value of the house. Jack is also not entitled to exclusive possession of the home. If Jack and Jill were married, the treatment of the house would be very different.

Jack would be entitled to keep his RRSP. Jill would keep her pension; quite unfortunately for Jack, as he was hoping to share in Jill’s pension to fund his retirement. Now that Jack and Jill are no longer together, Jack is likely going to have to come up with an alternative retirement plan.

The Exception

While the law for dividing property on the break down of the relationship for common law couples follows the title of the asset, it may be possible to make a claim for an equitable share in an asset that is in the other person’s name. The best means of doing this is to claim a Constructive Trust[2]  based on equitable principles. Be forewarned that such a process is expensive and protracted. And the threshold for establishing a claim is high.

Conclusion

When asking the question: to get married or not, it is important to understand the legal implications of your decision. The best way to do this is to consult with a lawyer to better understand how the law will apply to you. A lawyer can advise you as to what you can do to protect yourself, and your assets, prior to entering into either a marriage, or a common law relationship with your partner. A lawyer can draft a domestic contract that can set out what will happen if the relationship breaks down and can address the equal sharing of assets, whether you marry or do not marry. This will help to save you from ending up as Jack did: a victim of the fact that common law spouses are not included in the division of property provisions of the Ontario Family Law Act.

- Mary Jane Binks Q.C. and Lauren M. Angle for abblaw.ca

[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]

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[1] There are exceptions when it comes to dividing property between married couples, such as gifts or inheritances received by one spouse during the marriage, among other things. For more information on what can and cannot be equalized on separation, consult with a lawyer.

[2] A constructive trust is an equitable remedy that the court will impose if they believe the person retaining the asset will be unjustly enriched, to the detriment of the other, by being able to keep the entire asset.

Changes to Canada Not-For-Profits Corporations Act Require Compliance By All

In an effort to modernize its statutes and processes, the Government of Canada has brought about wholesale changes to the Canada Not-For-Profit Corporations Act (“the new NFP Act”). All federal not-for-profit corporations must complete the process to transition to the new rules no later than October 17th, 2014. Any not for profit corporation which fails to make the transition will be automatically dissolved.

The actual transition process itself is straight-forward.[1] A not-for-profit corporation must seek a Certificate of Continuance pursuant to the new NFP Act. This process is similar to the original incorporation process but instead of seeking to be re-incorporated, not for profit corporations (“NFPs”) must instead seek to continue operating under to the new act and obtain a Certificate of Continuance from the federal Government. There is no fee to apply for a Certificate of Continuance.

The new NFP Act requires the creation of new articles. Some of the provisions from an NFP’s previous letters patent, such as the name of the NFP, classes of members of the NFP, and the maximum/minimum number of directors of an NFP may be carried over. Other provisions which previously had to be included, such as provisions dealing with the removal of directors, annual meetings of members, and the appointment of an auditor for the NFP, now are expressly required to be removed from an NFPs articles of continuance.

The NFP’s articles of continuance must be approved by no fewer than two-thirds of the NFP’s voting members. Apart from the 2/3 vote, the meeting will be governed by the existing NFPs by-laws and letters patent because the new rules won’t come into effect until the NFP has been issued a Certificate of Continuance.

Once the Certificate of Continuance is issued an NFP is also required to bring its by-laws into adherence with the new NFP Act. The by-laws don’t have to be amended at the same time as the articles. The new NFP Act only requires the new by-laws be filed within 12 months of the issuance of the Certificate of Continuance. There is no fee for filing amended by-laws either.

The new NFP Act has been designed to cover many of the provisions currently contained in most NFPs by-laws. The Act is purposely designed in this way to provide NFPs with default rules and by-laws for their operation which apply in all circumstances, unless an NFP expressly chooses to change the by-laws.

There are only two by-law provisions which an NFP is now required to include in its by-laws:

     - the conditions required to be a member of the NFP, conditions

        required to transfer among classes or groups of members,

        and conditions on which membership, whether in a class, or

        generally, ends; and,

     - the manner in which notice of a meeting can be given to

       members entitled to vote at that meeting.

Should the NFP so choose, all other matters can be governed by the default rules contained in the new NFP Act.

If an NFP wishes to adopt different by-laws from the default prescribed in the new NFP Act, it still must operate within certain restrictions. For example, the new NFP Act requires that 5% of the members of an NFP eligible to vote can require that a meeting of the NFP be held. An NFP can choose to lower this requirement to a percentage lower than 5%, but it cannot raise this to any percentage higher than 5%. Equally, the default voting rules requite a 50% majority for an ordinary resolution and 66% majority for a special resolution of the NFP. An NFP can make these requirements stricter (requiring a higher percentage of the votes) but cannot make the requirements less stringent.

The decision to adopt different by-laws than the defaults should be governed by the needs of each individual NFP. No one set of by-laws can meet the needs of all NFPs.

While October 17, 2014 may seem in the distant future, it is advisable that NFPs commence the transition process now. Legal advice and assistance should be obtained early to ensure the new articles of continuance and by-laws are put in place in time, comply with the requirements of the new Act and are consistent with the needs and goals of the NFP itself.

Once legal advice has been obtained, and the proposed new articles and bylaws prepared, an NFP should convene one or more meetings of its voting members ensuring there is sufficient time for the passage of the new articles of continuance and by-laws. This will allow all necessary documentation to be filed well within the government timelines so as to ensure an NFP isn’t dissolved for failure to comply.

- Jonathan M. Richardson for abblaw.ca

Augustine Bater Binks LLP is able to assist not-for-profit corporations undertaking the necessary changes to adhere to the provisions of the new NFP Act. Call (613) 569-9500 to speak to one of our lawyers about the work required to assist an NFP in the transition process.

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[1] There is a different set of requirements for charitable organizations, moving beyond the requirements of the new NFP Act.  This article does not address the needs of charitable organizations to conform with the new NFP Act so they don’t lose their charitable organization status.  It is recommended that charities contact the Charities Directorate of the Canada Revenue Agency for more information.

Understanding Separation & Divorce

The term “divorce” has a very distinct legal meaning, yet many people fail to understand the difference between separation and divorce. Often the meanings of the two concepts are blurred together.

To illustrate, a conversation around a water cooler somewhere in Ontario might go as follows:

     MAURICE:   Did you hear the news? Moe from marketing and
                         Sylvie from accounting are separating!

     MARTHA:    That’s funny, I heard they got a divorce.

     MAURICE:   What’s the difference, all I know is that
                          she’s getting the house and he’s getting  
                          a lawnmower.

     MARTHA:    I don’t know the difference either…
                         at least it was one of those new cordless
                         mowers…

To alleviate the confusion between the terms ‘separation’ and ‘divorce,’ it is helpful to begin with section 8 of the Divorce Act, which allows either or both spouses to apply to the Court for a divorce when there has been a “breakdown of the marriage.”

Parties must apply to the court if they want to be divorced. So, if Moe and Sylvie are separating but are not applying to court, then it would be appropriate to say they are “separated” but not “divorced.”

To obtain a divorce, the parties must first be “spouses” within the meaning of the Divorce Act. This definition excludes people merely living together and “common law” spouses and means that the two persons must be legally married to one another. The issue of whether two people are legally married is an entirely separate, and sometimes complex, issue that will be canvassed in a future blog.

The Divorce Act also states that to be granted a divorce order, there must be a “breakdown of the marriage.”

According to the Divorce Act, a “breakdown of the marriage” can only be established where:

1. the spouses have lived separate and apart for at least one year immediately preceding the determination of the divorce proceeding and were living separate and apart at the commencement of the proceeding;

or

2. the spouse against whom the divorce proceeding is brought has, since celebration of the marriage,

(i) committed adultery, or

(ii) treated the other spouse with physical or mental cruelty of such a kind as to render intolerable the continued cohabitation of the spouses.

It is not possible to be divorced unless the parties fit into one of the above three categories.

While separation is necessary to establish first ground of marital breakdown, it is not relevant to the less commonly used grounds of adultery or cruelty.

“Separation" under the Divorce Act doesn’t just mean physical separation. The Act states that “spouses shall be deemed to have lived separate and apart for any period during which they lived apart and either of them had the intention to live separate and apart from the other…”.

Therefore, in addition to living apart for one year, the Divorce Act adds the additional element that at least one of the parties must have had the intention to live separate and apart from the other.*

Of interest, subsection 8(3)(ii) of the Divorce Act allows spouses to resume living together with the intention of trying to resolve their marital differences without interrupting the 1 year period, so long as it doesn’t last longer than 90 days. This subsection is consistent with other sections of the Divorce Act designed to encourage the spouses to reconcile. For example, the Divorce Act places duties on legal advisors and the courts to advise and assist spouses in reconciliation where appropriate.

The distinction between separation and divorce can also be relevant to the division of family property. In fact, determining the date of separation is often crucial for dividing marital property under the Family Law Act.

“Separation” is given the following meaning by the Family Law Act:

     The date the spouses separate and there is no reasonable prospect

     that they will resume cohabitation.

This definition implies that equalization of family property can occur whether or not the spouses are divorced. Going back to the water cooler conversation, just because Moe and Sylvie seem to have sorted out their property issues doesn’t necessarily mean that they are divorced or that they will ever get divorced in the future. Perhaps the two had settled all of the issues stemming from their separation in a separation agreement and were content not to apply for a divorce.

It is helpful to remember that while the concept of separation is often relevant to obtaining a divorce and to the determination of the valuation date for the purposes of equalization, it is legally distinct from divorce.

Who knows when this distinction might come in handy around the water cooler!

*[While there is an entire body of case law examining what constitutes living separate and apart for the purpose of establishing marital breakdown, a review of such law is outside the ambit of this blog posting. For an extensive review of the factors courts in Ontario use to determine whether parties are living separate and apart, the decision of Greaves v. Greaves [2004] CanLII 25489 (ON SC) provides a helpful starting point.]

- Michael D. Heikkinen for abblaw.ca

[The above article is for general informational purposes only and is not legal advice. If you live in the Ottawa area and would like advice about a legal issue please email us or call 613-569-9500 to speak with one of our lawyers or a member of our staff.]