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Property Division Explained

Posted in Divorce By

Division of Property and Assets

One of the most important parts of a divorce settlement or common law separation is the division of matrimonial property. Who will get the house? And, related to that, who can afford to keep the house, or to buy the other party out? What about RRSPs, pensions, and vehicles? What about the household contents? It is never easy to untangle a life, from a property perspective, but there are a few guiding principles that can make it a bit easier.


Matrimonial Property

If a couple is married, they automatically fall under the Family Property Act, and everything that they’ve acquired during the marriage, with some exceptions, is generally divided equally. The exceptions have to do with property that may have been acquired from a third party or insurance settlement, or in cases when one person has contributed disproportionately, or when the property has grown significantly, due to one person’s efforts, after the separation, but before the divorce. Some property is exempt from distribution, including property that was brought into the marriage by one party and that can still be traced in its current form. It’s up to the person who is claiming such an exemption to prove that the property was in existence before the marriage, and is still in existence in a way that can be clearly traced. Some property, like RRSPs and Pensions, has tax implications. It can be divided between the parties as is, by way of pension division or tax-free RRSP rollover.

Separating parties may want to agree to a division of property that is different than that set out by the Family Property Act – and that is OK, but it’s also important to understand what you would be entitled to under the Family Property Act.


“Common Law” Property

If a couple is not married, the law is a little bit more complicated. “Cohabiting Relationships” and “Adult Interdependent Relationships” are relationships where two people choose to live together without getting married, including same-sex couples. The term living “common-law” is no longer used in Alberta due to the introduction of the “Adult Interdependent Partnership Act.

This defines an “Adult Interdependent Partnership” as two people who live together in a relationship of interdependence:

  • for a continuous period of at least three years
  • of some permanence (and less than three years) if the couple has a child together, or
  • who have entered into an adult interdependent partner agreement

A relationship of interdependence is when two people are not married to one another but still:

  • share one another’s lives
  • are emotionally committed to one another, and
  • function as an economic and domestic unit

It’s important to realize that the term “common-law” is still used in many other Canadian laws, so you will see it used in many other jurisdictions and contexts.

If you are living in an Adult Interdependent Relationship then the Family Property Act allows either partner to make a claim for property division within two years from the date the applicant knew the relationship had ended or should have known that it had ended.

While it’s not our goal to take your property division matters to court, as we believe that it’s possible, and preferable to settle these matters outside of court, it is very important to understand what a court is likely to do when you are considering a property division settlement.


Property Division Explained - posted June 17, 2021

Read more articles about: Divorce

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