Family Property: What is it & How Might it Affect You?
When a couple separates, one of the issues that will need to be determined is whether and how to divide property. In Alberta the legislation governing the division of property on separation is called the Family Property Act (or if you and your partner separated prior to January 1st of 2020, the Matrimonial Property Act).
When lawyers refer to “Family Property” we’re referring to all property whether owned by one of the parties or both. It includes all assets and all debt acquired and accumulated by a couple (married and unmarried) during their time together.
Some assets remain exempt. The exemptions are listed in both the Matrimonial Property Act and the Family Property Act. They are as follows:
property owned by one of the spouses prior to the relationship;
gifts from third parties;
inheritances;
proceeds of settlement or judgment arising from a tort claim, and
proceeds of a life insurance policy.
Determining whether an asset is exempt from division can be tricky. Does the asset still exist? Has it been transferred from one investment to another (example: have we used exempt money to buy a house)? If so, can the funds be traced? Has the value of the asset increased over time? Is the increase in value subject to distribution? A lawyer can help you understand how these exemptions are applied and the intricacies involved.
Often, lawyers become involved only once couples separate. However, the Family Property Act now applies, in certain cases, to unmarried couples. If you are entering into a common law relationship, or if you are already in one, it may be wise to speak to a lawyer about how the Act might affect you upon separation. If you do not wish to be treated as though you were married, then you might want to consider entering into a Cohabitation Agreement with your partner. That will be a topic for another blog.