1. Family Property Act Overview
Alberta's Family Property Act governs how property is divided when married couples separate or divorce. The Act establishes a presumption of equal division of matrimonial property, regardless of who earned the money or whose name is on the title.
This legislation recognizes that marriage is an economic partnership and that both spouses contribute to the acquisition of family assets, whether through employment income, homemaking, or child-rearing.
Key Principles
- Equal division is the starting presumption
- Title of property doesn't determine ownership
- Both financial and non-financial contributions count
- Certain property may be exempt from division
2. What is Matrimonial Property?
Matrimonial property includes virtually all assets owned by either or both spouses at the time of separation, subject to certain exemptions.
Typically Included
- Family home (regardless of when acquired)
- Bank accounts and investments
- RRSPs and TFSAs
- Pensions and retirement benefits
- Vehicles
- Business interests
- Real estate investments
- Household contents
Valuation Date
Property is valued as of the "date of trial" unless parties agree otherwise. This means values can change between separation and the final hearing.
For pensions, special valuation rules apply, and a pension valuator may be needed to determine the present value of future benefits.
3. Exempt Property
Some property is exempt from equal division under the Family Property Act. However, exemptions can be lost if the property is converted or commingled with matrimonial property.
Categories of Exempt Property
- Gifts: Property received as a gift from a third party (not spouse)
- Inheritances: Property inherited during or before marriage
- Insurance proceeds: Payouts for personal injury, health, or life insurance
- Pre-marriage property: Assets owned before the relationship (with important exceptions)
- Property excluded by agreement: Items covered by a prenuptial agreement
Important Limitations
- Increase in value of exempt property during marriage may be divisible
- Exempt property used to purchase the family home becomes matrimonial property
- Tracing exempt property through various transactions can be complex
4. The Family Home
The family home receives special treatment under Alberta law. Even if one spouse owned the home before marriage, it becomes matrimonial property subject to equal division.
Options for the Family Home
Sale and Division
The home is sold, and net proceeds are divided equally. This is often the cleanest option if neither spouse can afford to keep the home.
Buyout
One spouse buys out the other's share, requiring refinancing in sole name. The buying spouse must qualify for the mortgage independently.
Exclusive Possession
Court may grant one spouse (often with children) exclusive possession temporarily, even if ownership isn't resolved yet.
Deferred Sale
Agreement to delay sale until children reach a certain age or finish school, with one spouse remaining in the home.
5. Division of Debts
Family debts are divided along with family assets. The net value of matrimonial property (assets minus debts) is what gets split equally.
Typically Divided
- Mortgage on family home
- Car loans for family vehicles
- Credit cards used for family expenses
- Lines of credit
- Student loans (context dependent)
May Not Be Divided
- Debts from before marriage
- Gambling debts
- Debts for personal luxuries
- Debts hidden from the other spouse
- Business debts (complex analysis)
Creditor Rights
Important: A court order dividing debt between spouses doesn't affect creditors. If both names are on a loan, the creditor can pursue either spouse regardless of what the court ordered. Ensure debts are properly transferred or paid off as part of your settlement.
6. When Division is Not Equal
While equal division is the starting point, courts can order unequal division when equal division would be "unfair and inequitable." Factors considered include:
- Length of the marriage (very short marriages may warrant unequal division)
- Duration of separation before proceedings
- One spouse's dissipation of assets (reckless spending, hiding assets)
- Significant contributions by one spouse to property in the other's name
- Tax consequences of property division
- Agreements between the parties
Unequal division is the exception, not the rule. Courts require clear evidence that equal division would be substantially unfair.