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Divorce in Ontario: Your Guide to Net Family Property (NFP) Calculations

Are you getting ready for a divorce in Ottawa or elsewhere in Ontario? As part of the process, you and your spouse must determine who is going to get what. Indeed, property division can be one of the most challenging parts of a divorce case. In Ontario, the net value of marital property will presumably be divided in an equal manner, with some exceptions and exclusions that your family lawyer can advise you of. A Net Family Property (NFP) calculation is used to determine the equalization amount owed from one spouse to the other. Within this article, our Ottawa divorce lawyer provides a comprehensive guide to NFP calculations and divorce in Ontario. 

Property Division is One of the Most Important Aspects of Divorce

Before your divorce can be finalized in Ontario, you and your spouse need to determine who gets to keep what and what amount of money, if any, needs to be provided to the other.. It can be very challenging for divorcing couples to untangle financial connections. For this reason, property division often leads to conflicts. Under the Family Law Act, a Net Family Property (NFP) calculation is performed to determine an equalization payment. The process involves calculating the difference in value between each spouse’s assets and debts relative from the date of marriage to the date of separation. . 

Ontario Divorce: Equalization of Net Family Property

In Ontario, a divorcing couple’s “marital” property is divided not through changes in ownership but through the payment of an equalization payment. The equalization of NFP is designed to ensure a fair division of assets and debts between spouses when they get divorced. To determine how to equalize property division, it is crucial to figure out what specific property, assets, debts, and liabilities are subject to the Net Family Protection calculation. 

What is a Net Family Property (NFP) Calculation?

Under S. 5(1) of the Family Law Act, A Net Family Property (NFP) calculation is a legal procedure that is used in Canadian divorce proceedings to determine the amount of equalization payment owed. Very roughly, it involves calculating the total net worth of each spouse at the date of separation and subtracting their net worth at the date of marriage – however there are very important exclusions and distinctions to be made, that can be explained by your divorce lawyer . The spouse with the higher NFP is typically required to make an equalization payment to the other spouse. 

A More Detailed Explanation of How NFP is Calculated

NFP calculations are complicated. Indeed, calculating the Net Family Property in Ontario involves a comprehensive, detail-focused assessment of each spouse’s assets and liabilities to ensure a fair distribution in the divorce. Here are four key steps of the NFP calculation in Ontario: 

  • Calculating the Value of Property on the Valuation Date (Date of Separation): To start, the spouses must determine the value of marital property on the date of their separation (divorce). Each spouse should compile a list of all assets owned on the valuation date. Along with other things, this includes real estate, bank accounts, investments, pensions, vehicles, and personal belongings. You should assign a fair market value to each asset as of the valuation date. Spouses all need to list all debts, including mortgages, loans, credit card debt, and any other financial obligations. The debts are subtracted from the assets. 
  • Determining the Value of Property on the Date of Marriage: Valuation of marital property can be challenging. You and your spouse must determine the proper fair market value for their assets and debts as of the date of marriage. 
  •  Identifying and Excluding Specific Assets: Certain assets may be excluded from the NFP calculation under the Ontario Family Law Act. The most notable examples include: A) Gifts received from third parties during the marriage, provided they were kept separate from family assets, B) Inheritance received during the marriage provided it was kept separate from family assets, C) Property that explicitly excluded by a valid prenuptial agreement. The value of these excluded assets is deducted from the net worth calculated on the valuation date. 
  • Finalization of the Equalization Payment: Once all of the information is compiled, you must compute each spouse’s NFP. You should subtract the net worth at marriage and the value of excluded property from the net worth on the valuation date for each spouse. From there, you should determine the difference between the two NFP amounts. Under Ontario law, the spouse with the higher NFP owes the other spouse half of the difference as an equalization payment. However, a court in Ontario may adjust the equalization payment if equal division is deemed unconscionable due to factors like a short marriage duration or reckless debts incurred by one spouse. 
  • Warning: The above is a very rough explanation of calculating Net Family Property, there are many expectations, distinctions, exclusions, laws, and case precedent that may impact your specific situation – you should speak to a lawyer about calculating Net Family Property values. 

Why Rely On RPB Family Law for Help With a Net Family Property (NFP) Calculation

Going through a divorce is never easy. Calculating what the equalization payment owed is can be very difficult. At RPB Family Law, we are a boutique family law firm that provides proactive legal advocacy to clients. We know that there are no one-size-fits-all solutions. Our Ontario divorce lawyers can help you with issues related to Net Family Property (NFP) calculations and property division more generally. 

Contact Our Ottawa Divorce Lawyer Today

At RPB Family Law, our Ottawa divorce lawyers have extensive experience handling property division issues. If you have any specific questions or concerns about Net Family Property (NFP) calculations and the impact on your divorce, we are here to help. Give us a call now or contact us online to arrange your confidential, no obligation initial consultation. From our office in Ottawa, we provide family and divorce representation throughout all of Ontario. 

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