If you are considering getting married and you currently own a home in which you plan to reside with your future spouse after you marry, read on!

Ontario has its own, unique method of dividing property between divorcing spouses, called "equalization of net family property". This means, in the simplest terms, that you and your spouse share with each other the increase in your net worth between the date of marriage and the date of separation. The policy behind Ontario’s Family Law Act (which deals with property division in this province) is that spouses have to share with each other what they accumulate, together or separately, during the course of the marriage. Each spouse, however, gets credit for the value of assets brought into the marriage (less liabilities). The assets brought into the marriage are not forever exempt from sharing but rather, only the increase in their value between the date of marriage and the date of separation is equalized. Here is the catch: a home owned by a spouse before the marriage, which subsequently becomes and remains at the time of the separation a matrimonial home, is an exception to the general rule.

What does this mean from a practical perspective?

FOR ITEMS OWNED ON THE DATE OF MARRIAGE, OTHER THAN THE MATRIMONIAL HOME: If John owned a $100 Picasso painting at the date of marriage and by the time of the separation, the value of the painting had increased to $200, John would be sharing with Mary only $100 (he would get credit in the calculation for the $100 value at the date of marriage).

FOR A MATRIMONIAL HOME OWNED ON THE DATE OF MARRIAGE: If John owned a home on the date of marriage and this home was the matrimonial home at the date of separation (ie: the spouses were living in the home), he would not be entitled to deduct the value of the home as at the date of the marriage. Rather, the entire value of the house (less any debts) would have to be included in his net family property and equalized with Mary.

This matrimonial-home-exception-to-the-rule is a good reason to consider a Marriage Contract. Such a contract can effectively deal with the problem and should be considered by all home owners considering marriage.