Going through a divorce or separation is stressful, and for most couples, one of the biggest concerns is how their property and debts will be divided. In Alberta, family property is generally shared between spouses, but the rules are more nuanced than a simple fifty-fifty split. Some property is divided equally, some can be divided unequally, and some is exempt from division altogether.
If you live in Edmonton or elsewhere in Alberta, it helps to understand your rights and how the law approaches dividing what you and your spouse or partner own.
What Law Applies?
In Alberta, the division of family property and debts following a marriage breakdown is governed by the Family Property Act (FPA). The FPA replaced the former Matrimonial Property Act on January 1, 2020. One of the most significant changes is that the FPA now applies to adult interdependent partners, often called common-law partners, and not only to married spouses. If you separated on or after January 1, 2020, the same rules, presumptions, and exemptions apply whether or not you were married.
According to the FPA, family property includes everything that either or both of you acquired during the relationship, regardless of whose name is on the title.
This may include:
- Assets: real estate, bank accounts, vehicles, investments, insurance policies, pensions, business interests, valuable collections, and household goods.
- Debts: mortgages, loans, lines of credit, credit cards, and lease obligations
Both assets and debts are taken into account, and property is valued as part of the division process.
How are Assets Divided in a Divorce in Alberta?
The FPA starts from a presumption that family property acquired during the relationship is divided equally between the spouses or partners. That presumption is not automatic. The court divides property in the way it considers just and equitable, which often means equal but can mean an unequal split depending on the circumstances. Property generally falls into three categories.
1) Property that will be divided equally:
Most property accumulated during the relationship is shared equally, regardless of who earned the money or whose name is on the title. This typically includes the family home, vehicles, pensions, and investments.
2) Property that may be divided unequally:
Some property can be divided unequally based on what is fair in the circumstances, including:
- Increases in the value of exempt property during the relationship.
- Property purchased with income or proceeds from exempt property.
- Property acquired after separation.
- Gifts between the spouses or partners.
3) Property exempt from division:
Certain property is exempt, meaning its value is kept by the spouse or partner who owns it. Exemptions include:
- The value of property owned before the marriage or relationship began.
- Inherited property.
- Gifts received from a third party.
- Certain damages awards or settlements paid to one spouse or partner.
- Certain insurance proceeds.
An exemption is not automatic. The spouse or partner claiming it must prove the property’s value on the relevant date, such as the date of the marriage or the date an inheritance was received. It also helps to keep exempt property separate and traceable. Mixing exempt funds with shared property, for example by depositing an inheritance into a joint account, can reduce or eliminate the exemption.
How the Court Decides What Is Fair
When deciding whether an equal division is fair, or whether an unequal division is appropriate, the court weighs several factors. The length of the relationship is one of the most significant, and the longer the relationship, the stronger the expectation of an equal division. The court also considers each person’s contribution, both financial and non-financial, including income earned, caring for children, and maintaining the home. The financial circumstances of each spouse or partner are relevant too, including income, assets, debts, and future earning potential, with the goal of leaving each person in a reasonable position. Any agreement between the spouses or partners may also affect the outcome.
What About Agreements Between Spouses or Partners?
Couples can agree on how to divide their property through a prenuptial agreement, a cohabitation agreement, or a separation agreement. To be binding under the FPA, these agreements must meet specific formal requirements. Each person must receive independent legal advice from their own lawyer, and each must sign an acknowledgement confirming that they understand the agreement and are signing voluntarily. An agreement that does not meet these requirements may not be enforceable.
What Happens when You Can’t Agree?
Many couples reach an agreement on their own or with the help of a lawyer, a mediator, or the collaborative process. If you cannot agree, either of you can ask the court to divide the property. Both parties are required to provide a sworn statement listing all property they own in whole or in part, including property located outside Alberta. The court then determines the value of the property and decides how the property and debts should be divided, aiming for a result that is fair in the circumstances.
Time Limits: Do Not Wait Too Long
There are deadlines for bringing a family property claim, and missing them may permanently bar your claim, so it is important to get advice early.
For married spouses, a claim for division of family property must be brought within two years of the divorce judgment, or of a declaration that the marriage is void. Because the clock usually runs from the divorce judgment rather than the date of separation, a separated spouse who has not yet divorced often still has time, although delay can create other problems.
For adult interdependent partners, a claim must be brought within two years of the date they knew, or ought to have known, that the relationship had ended.
Other deadlines can also apply, including a shorter window where property has been transferred or given away. The general Limitations Act does not extend these FPA deadlines, and the court has limited ability to grant relief once a deadline has passed. Because the rules depend on your circumstances, you should speak to a lawyer about how the deadlines apply to you.
Don’t Wait. Contact Chadi & Ibrahim Today.
Dividing family property can often become a source of tension and conflict, adding to the already stressful experience of a divorce or separation. At Chadi & Ibrahim, we understand the difficulties associated with dividing family property and are committed to minimizing stress while ensuring that our clients are aware of their rights and obligations.
