Equalization deals with how to get a fair division of the assets and debts. The idea is that there usually needs to be an adjustment paid to one spouse to "equalize" any difference between the two of them.
Equalization is something available to married couples only, which provides that each spouse will leave the marriage with the same value of net family property. The principle is easy. Each spouse calculates their own net family property. Then the spouse with the higher net family property pays half of the difference to the spouse with the lower net family property.
In practice, calculating equalization is challenging. It usually requires huge amounts of paperwork (bank statements for every asset and debt), property valuations by various professionals, as well as income-tax calculations specialized for family law.
There are rules on what qualifies as an asset, including, for example, the value of certain employment benefits like vacation leave and pensions.
There are special rules on what can be left out of the calculations and on what has to be included in the calculations.
The calculations are set out by statute and case law, and form some of the more intricate aspects of family law. For example, federal pensions have to be valuated following one process; but applying for the valuation of a provincial pension follows a very different process, using special forms.
Equalization refers only to capital, as opposed to income. (Income is usually the basis of determinations regarding support; whereas net family property is the basis of determining equalization).
Therefore, it is quite possible for you to be entitled to an equalization payment (to get your share of the capital), as well as receiving child support, and possibly even spousal support.
Equalization is not available to common-law spouses. Although common-law spouses may voluntarily elect to equalize, they cannot be ordered to do so by a court.
There is a time limit: you have to bring a claim for equalization within a certain number of years after separation.
It is best for equalization and spousal support to be calculated and reviewed at the same time, as there is sometimes an inverse relationship between the two and you need to have had a lawyer determine that before you finalize either one.
For more information, see the Community Legal Education Ontario website:
Continue to Part 3 - Dispute Resolution
Back to Family Law