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Separation/Divorce – Ontario

Please click the links below to find out more information about each topic:

For details on our services and fees, click here.

Pension valuations

Pensions are often people’s most valuable asset, and are considered to be family property under the Family Law Act of Ontario.

Defined benefit pensions are complex assets and can be difficult to deal with on divorce. There are two fundamental issues to consider: the mechanisms available to actually divide the pension and whether these mechanisms divide the pension fairly.

Pension Division

There are two primary mechanisms to divide a defined benefit pension: the actual pension payment can be split at retirement or a lump sum payment can be made from the pension plan to the non-member spouse which reflects the fair value of the pension. Previously, the law in Ontario did not allow the pension to be divided until the member retired or terminated from the pension plan. In most cases, the member spouse had to “buy-out” the non-member spouse by trading other assets and the pension was not divided at all. In order for a “buy-out” to occur, a fair value needed to be assigned to the pension (so the correct amount of the buy-out could be established).

However, a new law has taken effect on January 1, 2012 and has changed this situation and now permits an immediate division of the pension (click here for more information on the new law).

Fair Value for the Pension

Assigning a value to a defined benefit pension is not a straight forward task. There are many different ways to value a defined benefit pension. This leads to much confusion when couples are attempting to assign a value to a defined benefit pension on marriage breakdown. Previously, Ontario law did not specify the value to assign to a defined benefit pension on marriage breakdown (the previous valuation practices had evolved through case law) and members needed to retain an independent actuary to determine the value of their pension.

However, effective January 1, 2012 the new law in Ontario takes effect, which has changed the way in which pension benefits are valued on marriage breakdown in Ontario (click here for more information on the new law).

Foreign pensions/pensions from other provinces

In the case of foreign pensions, it is likely that an actuarial valuation by an independent actuary would be required. Actuaries can assist clients by valuing pensions from other countries and providing the lump sum value of a foreign pension in Canadian dollars and ensure that the valuation is in accordance with the law in Ontario; this valuation will enable the couple to include the fair value of their foreign pension with the rest of their family property.

Please read the information below and contact us if you have any questions.

Valuation of stock options and restricted stock units (RSUs)

Some employers provide stock option and/or restricted stock unit grants as part of an employee’s compensation. If stock options or restricted stock units have been granted during the period of marriage and have not been exercised at the date of separation, these options are considered family property and may need to be valued. For more information, click the link below.

Valuation of accrued sick days

Some employees receive a lump sum payment at retirement which reflects the ‘banked’ sick days during their career. This payment is considered family property under the Family Law Act of Ontario on divorce and may need to valued. We can perform or review valuations of accrued sick days. For more information, click the link below.

Support payments

After a divorce, there is often a need for regular support payments to be made from one spouse to the other (either child support or spousal support). Please click the link below for more information on support payments.

Financial projections

It is important to consider the long-term financial implications of a separation agreement for both spouses; it is important that both spouses understand the impact that any settlement proposal will have on their future cash flow and net worth. For example, if a spouse keeps the matrimonial home as part of the settlement it is important that they have adequate cash flow to maintain the home and pay for their living expenses. Please click on the link below for more details.