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When going through a divorce in Ontario, both spouses must go through a process known as the equalization of net family property (NFP). Under Ontario’s Family Law Act, NFP represents the total assets and liabilities accumulated during the marriage, excluding certain exemptions. This includes various types of property, such as real estate, investments vehicles, pensions, liabilities and other financial holdings.

What many people don’t realize is that this process involves not just assets and debts in Ontario, but also any property or financial holdings outside the province, or even outside Canada. If you or your spouse own property, investments, or hold assets in another country or province, these must also be accounted for in the divorce proceedings.

The equalization process does not require spouses to divide each asset directly. Instead, both parties calculate their total net family property, which is the value of their assets minus their debts. The spouse with the higher NFP may have to make an equalization payment to the other to ensure a fair division of the marital assets. To accurately calculate NFP and the equalization payment, all foreign assets and liabilities must be disclosed, along with those in Ontario. How foreign assets impact equalization depends on what type of asset it is and where it’s located.

One of the most difficult aspects of the process is identifying, valuing and disclosing foreign assets. While assets within Ontario are relatively easy to value and disclose, foreign property can be harder to assess. If you own a property or a business in another country, or if you have a bank account or investment overseas, these assets must be included in your financial disclosure. This can be difficult as some countries don’t have a standard process for appraising assets. It can also be challenging to access financial records or prove ownership. The value of these foreign assets will need to be converted into Canadian dollars for the purpose of calculating NFP. In addition, you may need to obtain documentation from foreign banks, real estate agents or other professionals to verify the value of the assets you hold. This can all make it more complicated to accurately assess the value of your foreign assets.

The requirement for full disclosure is especially important when dealing with foreign assets. Failure to do so can have serious legal consequences. If one spouse withholds or fails to disclose foreign assets, the court can later overturn the divorce settlement if these assets are discovered. This can result in the recalculation of the NFP and equalization payment, and in some cases it may lead to additional legal actions being taken against the spouse who failed to disclose their property.

Despite these challenges, the law mandates full and honest disclosure of all assets. To prevent any complications, it’s strongly recommended to seek advice from an experienced family lawyer who can guide you through the complexities of handling foreign assets in a divorce.