Can you lose half your house because you married someone (for a short time)?

The short answer is yes. A lot of people unnecessarily lose a lot of money after a short marriage due to a “quirk” in Ontario law. However, it is not a hard problem to avoid. Unfortunately, most people do not take the necessary steps and unnecessarily lose hundreds of thousands of dollars to an ex-spouse.

In Ontario, married spouses do not get an actual legal interest in each other properties. Your house is still 100% yours. The spouse still owns his/her assets. In Ontario, the way property division works is each spouse shares the value of the growth of his or her net worth with his or her spouse. You take your net worth now, subtract your net worth on the date of marriage and come up with a number. Your spouse does the same thing. Then one spouse makes a cash payment to the other to make the numbers the same. The effect of this is to make the growth of your net worth during the marriage the same. You do not have any right to your spouse’s assets, but he or she may have to sell some assets or transfer them to you to make the payment. For more on this see this blog post.

However, and this is very important, if the house you lived in when you separated is the same house you owned on the date of separation, you get absolutely no credit for bringing it into the marriage. It is as if you bought the house after the date of marriage with money that you earned after the date of marriage. This essentially means that your spouse is entitled to have the equity in the house, even if you brought it into the marriage fully paid for. See this video and this podcast. It is only half of the equity (the value of the house minus the mortgage) that your spouse shares with you.

There are a few ways to make the impact less devastating on you. The best things to do have to be done before or during the marriage. You can get a marriage contract that gives you credit. If the marriage contract is done properly, which requires the help of a lawyer, then judges usually think that giving a spouse credit for bringing the house into the marriage is fair. The other choice is for both you and your spouse to designate one property as the matrimonial home on the title. If both parties sign the marriage contract, then all other matrimonial homes cease to be matrimonial homes. If the house you brought into the marriage is not the one that is designated as the matrimonial home, you will get full credit for bringing it into the marriage. 

There may be other things you can do (as discussed in the video and the podcast), but you really do need to speak to a family lawyer. That appointment may save you thousands of dollars. If you want some general information, or you want more of an explanation of these concepts, here is an easy-to-understand best-selling book on Ontario Family Law that covers them and a whole lot more.