What Is Equalization Of Net Family Property?
In Ontario, when a marriage ends, whether through separation or divorce, the Family Law Act provides for an equalization of net family property (NFP) between the spouses. This process ensures that both spouses leave the marriage on a fair financial footing, recognizing marriage as an equal partnership.
Each spouse calculates their net worth as of the date of separation and subtracts their net worth as of the date of marriage. The spouse with the higher increase pays half the difference to the other spouse as an equalization payment.
But what happens if one spouse tries to “protect” or shield certain assets by leaving them in a will?
Are Assets Left Through A Will Excluded From Equalization?
Not necessarily. The Family Law Act governs equalization, and assets cannot simply be made immune to equalization by stating so in a Will. When spouses separate or divorce, the division of property is determined under statute, not under testamentary instructions.
A will typically governs what happens upon death, not separation. Equalization occurs during the lifetime of both spouses when the marriage ends in divorce or separation. Therefore, an asset subject to the equalization regime remains in play regardless of what the spouse’s will may say.
What Factors Are Considered?
The Family Law Act does allow for certain exclusions from equalization, such as:
- Property received as an inheritance during the marriage (if kept separate and not co-mingled into the matrimonial home).
- Gifts from third parties to one spouse.
- Damages for personal injury awards.
However, these exclusions must meet the criteria set out in the Act. Simply writing into a will that a certain asset “shall not form part of equalization” does not automatically exclude it.
The court examines the statutory framework first, rather than the private wishes of the spouse who drafted the will.
Can A Spouse Rely On A Will To Protect Assets From Equalization?
In most cases, no. A will cannot override Ontario’s family property laws. If the parties are separated, the Family Law Act governs the division of assets.
That being said, a spouse may use domestic contracts, such as a marriage contract (prenup/postnup) or a separation agreement, to lawfully opt out of or modify the equalization regime. These agreements are enforceable under Part IV of the Family Law Act if they meet the statutory requirements.
By contrast, a will is not a substitute for a marriage contract.
Key Case Law Guidance
Ontario courts have consistently held that property division at separation is a statutory right that cannot be unilaterally displaced by a will. Equalization claims operate independently of testamentary provisions.
That said, when one spouse dies, the surviving spouse may elect to either:
- Take under the deceased spouse’s will, or
- Make a Family Law Act equalization claim against the estate.
This ensures the surviving spouse cannot be unfairly disinherited by a will that seeks to exclude them from equalization rights.
Practical Guidance
- If you are separating, equalization applies regardless of a spouse’s will.
- If one spouse has passed away, the surviving spouse can elect for equalization instead of accepting what the will provides.
- A will alone cannot shield property from equalization; only a properly executed domestic contract can.
Our Skilled Lawyers Can Help You
If you are going through a separation or divorce and are concerned about how assets are divided, or if you are dealing with the estate of a former spouse, our experienced family law lawyers can guide you through your options. Equalization is complex, particularly where inheritances, estate planning, and exclusions are involved.
At Ayaz Mehdi Professional Corporation, we assist clients in navigating equalization claims, negotiating separation agreements, and protecting their rights in both family and estate contexts. Contact us today to understand your options.
Disclaimer: Kindly note that sending or receiving information through this site does not establish a solicitor-client relationship. Legal matters are fact-specific, and the law is variably changing. The views expressed and the content provided on this blog are general guidelines and cannot substitute for proper legal advice. Schedule your legal consultation by clicking here: Let’s meet!
