The Importance of the Date of Separation Following a Breakdown in Marriage

In addition to being emotionally draining, separation and divorce can be financially devastating. Of the many things that will have an impact on your finances following the breakdown of a marriage, the date of separation is likely one of the most important, for three reasons:

  • The date of separation is a key consideration in the equalization of net family property;
  • Spousal and child support will likely begin as of the date of separation;
  • A divorce can be obtained one year after the date of separation.

Equalization of Net Family Property

The Family Law Act dictates that each partner is entitled to one half of the value of property accumulated during the marriage. In order for each party to end up with the same net property following the breakdown of the marriage, the court may order one spouse to pay the other an “equalization payment”.

The Act provides a multi-step formula to be used to determine these payments:

Step One: Determining “Date of Separation Assets”

  • Add up the assets of each spouse on the date of separation;
  • Then, subtract any debts owing on the date of separation;
  • And, subtract any gifts from third parties (such as inheritances received during the marriage).

Step Two: Determining “Date of Marriage Assets”

  • Determine the value of all assets that each spouse brought into the marriage (their value on the date of marriage will be relevant, not their value on the date of separation). Do not include the matrimonial home.

Step Three: Net Family Property

  • For each spouse, subtract the value of “date of marriage assets” from the “date of separation assets”;
  • The amount arrived at by the end of this calculation is the net family property (NFP). One spouse will usually have a higher NFP than the other.
  • Subtract the lower NFP from the higher NFP and divide the difference in half.

The end result of this calculation is the amount of the equalization payment, which the spouse with the higher NFP must pay to the spouse with the lower NFP.

How to Determine the Date of Separation

Determining when the date of separation occurred can have a significant impact on an equalization calculation. Spouses may disagree as to when the actual separation took place. For instance, one spouse may prefer to have a later separation date used if their net worth has decreased over time. Choosing one separation date over another can mean the difference of thousands of dollars in calculating an equalization amount.

The date of separation can be challenging to agree on and can become quite contentious. The date of marriage can easily be determined by referencing a marriage certificate or marriage license. However, the date of separation generally has no corresponding paperwork or documentation that can point to an exact date.

In addition to lack of documentary proof, many other factors can complicate when the date of separation actually occurred. For instance, many separated couples choose to continue living under the same roof while going through the process of formally ending their marriage. This may be for financial reasons, or to make the transition easier for children. This can significantly muddy the waters in terms of determining when an actual separation took place.

At the end of the day, if there is a dispute over the date of separation, a judge will make a factual decision based on the circumstances of the parties and the evidence presented.

If you have questions about determining the date of separation, or about valuation of your property and other assets, contact Financial LitigationEli Karp and his team focus specifically on the financial aspects of family law. We have experience handling the complicated elements of high-income families, including valuing corporate ownership, offshore assets, and real property. With our niche skill set, our clients can be confident that their financial well-being is protected throughout the process of separation and divorce, and beyond. Respond to a legal crisis with Financial Litigation, and let our unique experience guide you through your financial or family law dispute. Schedule your consultation online, or by calling us at 416 769 4107 x1.