How does Division of family property work in the province of New Brunswick?

If you are married and decide to end your relationship, you may wonder how your property will be divided between you and your spouse.

In the Province of New Brunswick, property division is determined by the provisions of the Marital Property Act, RSNB 2012, c. 107. In section 2 of the Act, in recognition of the fact that child care, household management and financial provision are joint responsibilities of spouses, that recognition entitles each spouse to an equal share of the marital property and imposes on each spouse, in relation to the other, the burden of an equal share of the marital debts.

The law in most jurisdictions in respect of property division is very similar. In this blog post, we will explain what this process entails, how it is calculated, and what exceptions apply.

What is net family property?

In Ontario, Net family property (NFP) is the value of all the property that each spouse owns on the date of separation, minus any debts and liabilities, and minus the value of any property that each spouse owned on the date of marriage, adjusted for inflation. The date of separation is the date when you and your spouse decided to live apart with no intention of resuming your relationship. The date of marriage is the date when you legally got married.

To calculate your NFP, you need to follow these steps:

1. Add up the value of all your assets on the date of separation, except for those that are excluded by law (see below). This includes things like bank accounts, investments, vehicles, furniture, pensions, etc. If you own any property jointly with your spouse, include only half of its value in your calculation.
2. Subtract the value of all your debts and liabilities on the date of separation. This includes things like mortgages, loans, credit cards, taxes, etc.
3. Subtract the value of all your assets on the date of marriage, adjusted for inflation, except for those that are excluded by law (see below). This includes things like inheritances, gifts, personal belongings, etc.
4. The result is your NFP.

What is equalization?

Equalization is a way of sharing the increase in value of the spouses’ property during their marriage. The spouse with the higher NFP pays half of the difference between their NFP and the other spouse’s NFP to the spouse with the lower NFP. This payment is called an equalization payment.

For example, suppose Spouse A has an NFP of $80,000 and Spouse B has an NFP of $30,000. The difference between their NFPs is $50,000. Spouse A pays half of this amount ($25,000) to Spouse B as an equalization payment.

The formula for calculating the equalization payment is:

Equalization payment = (higher NFP - lower NFP) / 2

What are the exceptions?

There are some exceptions to the general rules of equalization. Some types of property are excluded from the calculation of NFP, such as:

• Property that was acquired by gift or inheritance from a third person after the date of marriage
• Income from property that was acquired by gift or inheritance from a third person after the date of marriage, if the donor or testator expressly stated that it was to be excluded
• Damages or a right to damages for personal injuries, nervous shock, mental distress or loss of guidance, care and companionship
• Proceeds or a right to proceeds of a life insurance policy
• Property that is held in trust for another person
• Property that the spouses have agreed by a domestic contract (such as a marriage contract or a separation agreement) to exclude from their NFP

However, these exclusions do not apply to the matrimonial home, which is the home where the spouses lived together before their separation. The matrimonial home is always included in the calculation of NFP, regardless of how it was acquired or who owns it. If there is more than one matrimonial home, the spouses can choose which one to include in their NFP.

Another exception is that a court can order an unequal division of net family property if it finds that equalizing the NFPs would be unconscionable (extremely unfair) in the circumstances. Some factors that a court may consider are:

• A spouse’s failure to disclose debts or liabilities that existed at the date of marriage
• A spouse’s reckless or bad faith depletion of their property
• A spouse’s contribution to the acquisition, preservation or maintenance of another spouse’s property
• The length of time that the spouses cohabited
• Any other relevant circumstance

In New Brunswick, the law that governs the division of property when couples separate is set out in section 3 of the Marital Property Act. It reads as follows:

Application for division of marital property

3(1)Each spouse, on application to the Court, is entitled to have the marital property divided in equal shares if

(a) a judgment granting a divorce is rendered,

(b) a marriage is declared a nullity,

(c) the spouses are living separate and apart and there is no reasonable prospect of the resumption of cohabitation, or

(d) a marriage has broken down and there is no reasonable prospect of reconciliation, whether or not the spouses are living separate and apart.

3(2)Subject to subsection (4), no application shall be made under subsection (1) later than 60 days after a spouse ceases to be a spouse by reason of a divorce or declaration of nullity.

3(3)For the purposes of this section, a person whose marriage is declared a nullity shall be deemed to have been a spouse during the period between the purported solemnization of marriage and the declaration of nullity.

3(4)The Court may extend the limitation period by such length of time and on such terms as it considers just, if a person is prevented from making an application within the limitation period fixed in subsection (2) by

(a) lack of knowledge of the granting of a divorce or a declaration of nullity, or of the date of it, or

(b) circumstances reasonably beyond his or her control.

Marital Property is defined in the Act as follows:

“marital property” means(biens matrimoniaux)

(a) family assets;

(b) property owned by one spouse or by both spouses that is not a family asset and that was acquired while the spouses cohabited, or in contemplation of marriage, except

(i) a business asset,

(ii) property that was a gift from one spouse to the other, including income from that property,

(iii) property that was a gift, devise or bequest from any other person to one spouse only, including income from that property,

(iv) property that represents the proceeds of disposition of property that was not a family asset and was not acquired while the spouses cohabited or in contemplation of marriage, or that was acquired in exchange for or was purchased with the proceeds of disposition of such property or that represents insurance proceeds with respect to loss of or damage to such property, and

(v) property that represents the proceeds of disposition of property referred to in subparagraphs (ii) and (iii) or that was acquired in exchange for or was purchased with the proceeds of disposition of such property or that represents insurance proceeds with respect to loss of or damage to such property; and

(c) property that was acquired by one spouse after the cessation of cohabitation and that was acquired through the disposition of property that would have been marital property had the disposition not occurred,

but does not include property that the spouses have agreed by a domestic contract is not to be included in marital property.

How can I get legal help?

Dividing property after a separation can be complicated and stressful. It is important to get legal advice from a seasoned family lawyer who can help you understand your rights and obligations in your specific set of circumstances. A lawyer can also help you negotiate a fair settlement with your spouse or represent you in court if necessary.

If you need legal help, you can also contact Legal Aid New Brunswick Click Here to find out if you qualify for free or low-cost legal services.

Grant Rayner*

If you are separating from your spouse in the Upper St. John River Valley of New Brunswick, call Langdon Law at 506.497.2560 for a consultation. Offices in Woodstock, Hartland and Florenceville-Bristol to serve you.

*Grant is a member of the Law Society of Ontario. He has permission from the Law Society of New Brunswick to practice as a visiting lawyer with the firm Langdon Law pending the transfer of his membership with the Law Society in Ontario to the Law Society of New Brunswick.

Please note that the foregoing is intended as informational only. It is not legal advice and should not be relied upon as such. To secure legal advice contact a lawyer who can be informed of the facts in your specific set of circumstances and advise as to how the law applies in that set of circumstances.