Short Term Marriages and Equalization
In the last few years we have witnessed an upward trend and increase in separations and divorces after a few, short years of marriage. The COVID-19 pandemic has lent a helping hand towards this trend and increase in divorces amongst newlyweds.
Oftentimes, and without proper legal advice, some parties are misled to believe they are not entitled to property division after a short-term marriage. Specifically in the event that your spouse brought the property, or matrimonial home, into the marriage.
The Treatment of the Matrimonial Home
The two single most important dates as far as property division is concerned are the date of marriage and the date of separation. Any wealth that is accumulated within this time period is subject to division. For example, if you entered into the marriage with $150,000 in your bank accounts, and by the time you separated, your bank account has increased to $200,000, your wealth has accumulated by $50,000. This increase in assets from date of marriage to date of separation is what will be divided.
So, what is so special about the home? In Ontario the matrimonial home carries specific and unique traits in that it does not get a date of marriage deduction. What does this mean? Remember, in the bank account example, only the increase of $50,000 was subject to division, rather than the entirety of the $200,000 that was in the bank account on the date of separation. Conversely, the matrimonial home will be divided based on the value as of the date of separation only. For example, if your home is worth $1,700,000 on the date of separation, the entirety of that value will be divided, regardless of how little, or how much, it has increased over the length of the marriage.
The Five-Year Rule of Thumb
Sometimes, one spouse may bring the property into the marriage with no contribution from his or her spouse, and years before the marriage. Depending on the jurisdiction, the courts have acknowledged the potential unfairness that may occur if the matrimonial home is divided as of the date of separation. To better illustrate, imagine the wife purchased a $700,000 home in 2019. Later, she married in January of 2020, however, by October 2020 realized the marriage was not working. By the time the parties separate in October, the house has increased in value to $950,000.
Applying the rules of property division, the husband would be entitled to one half of the value of the $950,000 home, notwithstanding the marriage only lasted ten months, and he did not contribute towards acquiring the home.
The courts have acknowledged the unfairness of the windfall that the spouse would receive. In our example above, the husband would receive approximately a payday of $475,000 from the property (that the wife brought in) upon separation.
To remedy this, Courts have applied the 5-year rule of thumb; allowing for unequal division of property if equal division of property would be unconscionable. They have further ruled in several cases that receiving a windfall from the proceeds of a home from a short-term marriage of under five-years would be considered unconscionable.
Some courts have used a mathematical formula, prorating the amount that one spouse would receive in accordance with the number of months married over the statutory five-year period. For example, if the parties were married for ten months, this would be reflected as 10/60, or 16% of what would otherwise be equal division. However, the mathematical formula is not mandatory and does not need to be applied to all cases. A trial judge has the discretion to look at all the evidence in front of them, acknowledging that equal division under the circumstances would be unconscionable, and thereafter setting a more reasonable number for division purposes.
Know Your Rights
If you have recently separated from your spouse after a short-term marriage, ensure that you do not let your spouse or their lawyer intimidate you into thinking you are not entitled to anything. While your spouse may have solely acquired the property prior to the marriage, you still have a claim for division of marital property. Especially if you have made contributions towards the home that have directly increased the value of the home as a result of your hard work and contribution.
Before signing any agreement or waiving your rights and entitlements under the law to any marital property, it is important you consult and discuss with an experienced family lawyer who is familiar with the case law and precedent in your jurisdiction.