Here's a super quick, with nice round made-up numbers, example of equalization:
Assets:
House $400k
Cottage $200k
Her car $20k
Your car $4k
Your pension $100k
Her RRSP $20k
Debts:
House Mortgage $50k
Loan on her car $10k
Credit Cards $2k
It's pretty optimistic - I hear most Canadian families have it much much worse!
So anyways, here's what that would look like divided equally.
Say you end up with
Cottage $200k
Your car $4k
Your pension $100k
Half the Credit Cards -$1k
TOTAL $303k
and she ends up with
House $400k
Her car $20k
Her RRSP $20k
House Mortgage -$50k
Loan on her car -$10k
Half the Credit Cards -$1k
TOTAL $379k
She ends up with $76k more than you, so she has to get a loan (probably increase the mortgage if she can afford it) and pay you $38k in cash. A decent down payment on a new house. If she can't increase the mortgage, she's got to change things so she can make up the difference, say by giving you the nice car and taking the crap one instead, cashing out her RRSP, etc.
Alternately, this might happen:
Say you end up with
House $400k
Cottage $200k
Your car $4k
Your pension $100k
House Mortgage -$50k
Half the Credit Cards -$1k
TOTAL $653k
and she ends up with
Her car $20k
Her RRSP $20k
Loan on her car -$10k
Half the Credit Cards -$1k
TOTAL $29k
Then the difference is $624k so you have to find $312k in cash to give her somehow. Most likely by selling the cottage, or taking out a bigger mortgage yourself, or signing off half your pension to her or any combination thereof. But then she has to buy a new house to live in. Or blow it all on Caribbean cruises with the other guy - you don't get to pick.
That's the basics of equalization (and if I'm doing it wrong, someone please let me know because I'm in the middle of it myself!) except that you have to include every single damn thing, like student loans, antiques, your appliances, that ugly picture on the wall, meagre savings account balances, etc. It can really get bogged down if people want to be selfish and difficult. There's also the issue of who had what BEFORE the marriage, because that isn't included, unless it's the matrimonial home. And sometimes people agree not to divide everything 50-50, if, for example, it's very important to the spouse leaving the house that the children be able to continue living in it at least part of the time and there's no other way to continue to afford it.
Okay, that was not super-quick after all. But hopefully useful. There's a specific legal form to use to write this all down on, which someone may be able to link for you.
Assets:
House $400k
Cottage $200k
Her car $20k
Your car $4k
Your pension $100k
Her RRSP $20k
Debts:
House Mortgage $50k
Loan on her car $10k
Credit Cards $2k
It's pretty optimistic - I hear most Canadian families have it much much worse!
So anyways, here's what that would look like divided equally.
Say you end up with
Cottage $200k
Your car $4k
Your pension $100k
Half the Credit Cards -$1k
TOTAL $303k
and she ends up with
House $400k
Her car $20k
Her RRSP $20k
House Mortgage -$50k
Loan on her car -$10k
Half the Credit Cards -$1k
TOTAL $379k
She ends up with $76k more than you, so she has to get a loan (probably increase the mortgage if she can afford it) and pay you $38k in cash. A decent down payment on a new house. If she can't increase the mortgage, she's got to change things so she can make up the difference, say by giving you the nice car and taking the crap one instead, cashing out her RRSP, etc.
Alternately, this might happen:
Say you end up with
House $400k
Cottage $200k
Your car $4k
Your pension $100k
House Mortgage -$50k
Half the Credit Cards -$1k
TOTAL $653k
and she ends up with
Her car $20k
Her RRSP $20k
Loan on her car -$10k
Half the Credit Cards -$1k
TOTAL $29k
Then the difference is $624k so you have to find $312k in cash to give her somehow. Most likely by selling the cottage, or taking out a bigger mortgage yourself, or signing off half your pension to her or any combination thereof. But then she has to buy a new house to live in. Or blow it all on Caribbean cruises with the other guy - you don't get to pick.
That's the basics of equalization (and if I'm doing it wrong, someone please let me know because I'm in the middle of it myself!) except that you have to include every single damn thing, like student loans, antiques, your appliances, that ugly picture on the wall, meagre savings account balances, etc. It can really get bogged down if people want to be selfish and difficult. There's also the issue of who had what BEFORE the marriage, because that isn't included, unless it's the matrimonial home. And sometimes people agree not to divide everything 50-50, if, for example, it's very important to the spouse leaving the house that the children be able to continue living in it at least part of the time and there's no other way to continue to afford it.
Okay, that was not super-quick after all. But hopefully useful. There's a specific legal form to use to write this all down on, which someone may be able to link for you.
Comment