Calculating the Equalization Payment in Ontario

3 Good and 1 Bad Reason to Offer Profit Sharing Rather Than Bonuses


Question:


After a few years marriage, John and Maria are divorcing. John brought in $20,000 and Maria brought in $50,000.
The difference, $50,000-$20,000=$30,000 should be equalized during divorcing process and Maria gets $15,000 (30000/2). Is that correct?


Answer:


You would be correct in some jurisdictions, but not Ontario.
Ontario only equalizes the profits during the marriage.
Each party starts off with what they brought in.
Then, there is a calculation as to how much each party made over the course of the marriage, and it’s that amount which is equalized.
It’s not in your example, but if the husband’s wealth increased by $20,000, and the wife’s wealth increased by $30,000 during the marriage, the total increase would be $50,000 and they would each be entitled to half of that. So, the wife would transfer $5,000 to the husband and they would be equal.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com

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