These are typically the types of questions we are asked by concerned spouses in the process of divorcing their partners and unsure what they are entitled to from the marital estate.
They are legitimate concerns and it helps to understand a little about the property division laws in Alberta so that you can be prepared for what’s around the corner.
The good news is that you and your spouse have a reasonable chance of being able to resolve your property division affairs without a judge’s intervention if you understand the rules and can call on the guidance of a property division lawyer.
The majority of cases in Alberta do not end up with a judge deciding and a long, expensive legal battle, though these may be the ones that grab the headlines.
Learn More → How to succeed with your Alberta divorce mediation
What are the relevant property division laws in Alberta?
The Matrimonial Property Act used to be the main piece of legislation in Alberta outlining what happens to property when a married couple divorces.
This was replaced by the Family Property Act on January 1, 2020. This is the main legislation now used and it covers Adult Interdependent Partners (AIPs) as well as married couples.
The basic laws state that assets (and debts) must be divided equitably between divorcing partners or spouses — provided that they have been together and lived as a married couple for a year or more.
An equitable division does not necessarily mean an equal division. In practice, however, the fairest way is sometimes to divide the property 50-50 down the middle.
Some relationships add complexity to the equation and other factors may need to be considered for a fair outcome — and Alberta laws do allow for these factors to be considered.
What are “marital assets” in Alberta?
In most marriages or adult interdependent partnerships, a variety of assets exist from the family home and motor vehicles to pensions. There may also be debts to factor in.
Finding an equitable distribution at separation can be challenging — but it is possible with the full disclosure of finances/property, honest discussions, and sometimes the help of a mediator or a property division lawyer(s).
Financial contributions to the marriage should be categorized as one of the following:
- Marital property
- Exempt property
- Increase in value of exempt property
Property disclosure is mandatory in Alberta. If your partner will not comply, disclosure can usually be enforced by filing a Notice to Disclose/Notice of Motion with the court.
Hopefully, though, it doesn’t come to that and you can liaise amicably with your partner to come up with a workable solution.
Apart from some notable exemptions, marital assets are generally considered to be anything accrued during the time of the marriage, such as:
- Real properties
- All forms of legal title (land, vehicles, etc.)
- Savings and bank accounts
- Pension benefits accrued during the marriage
- Any gifts/inheritances given to one spouse with the expectation that both spouses will benefit equally
- Joint investments
- Life insurance policies
- Personal properties and rights acquired between the marriage date and the application for division date
Most debts are also considered part of the marital estate.
Which assets are exempt from division?
Exempt property includes anything that either spouse brought into the marriage plus some other specific items, including:
- Most inherited assets (as long as they were not given with the intention for both partners to benefit equally)
- Gifts from a third party
- The proceeds from a personal injury lawsuit or insurance
Any property and debts that relate to only one spouse or partner are not subject to Alberta’s equitable property division laws. However, a spouse may need to verify that a piece of property is exempt if the assertion is challenged.
Note also that the increase in value during the marriage of items considered separate property may be classified as marital property.
So, for an art collection that increases in value by $10,000 during the period of the marriage, the art collection itself will remain as separate property but its $10,000 increase in value may be subject to equitable division.
Are non-financial contributions considered when dividing property in Alberta?
When assets are divided during a divorce or separation, both the financial and the non-financial contributions of each partner to the relationship may be considered.
Financial contributions are any actions taken that improve the financial situation of the couple. These are generally divided equally unless there has been reckless wastage of assets by one of the partners (such as gambling).
Non-financial contributions are actions such as looking after the children or managing the home, which have no intrinsic financial value but add considerably to the relationship.
These contributions are more difficult to put numbers but they are a common feature of relationships. For property division to be “equitable”, they should be considered.
Who gets the home?
The major asset in many Alberta marriages is the family home. It is also one of the most common causes of stress and disputes.
The family home is considered part of the marital estate and is subject to the same property division laws as other assets.
You cannot divide a home down the middle so one partner (usually the spouse with the children) may live in and take ownership of the property. Alternatively, if the house is by far the major asset, it may be impossible to award it to one spouse equitably so it will need to be sold and the proceeds divided.
An experienced local property division lawyer will be able to help you calculate how the family home fits into the overall equation along with the tax consequences.
How to reach a property division agreement without litigation
If spouses or partners can come to an agreement through private discussions, it’s generally best for all concerned.
However, even if matters can’t be settled around the kitchen table, it doesn’t necessarily mean that the court must decide.
Collaboration between divorce lawyers or mediation sessions may settle property division disputes without a judge having to decide.
