The Family Property Act: A New Property Division Landscape for Albertans
Though not widely publicized, the legislative scheme for family law in Alberta recently underwent a substantial change with the coming into force of the Family Property Act (FPA) on January 1, 2020. This Act replaces the Matrimonial Property Act and extends property rights previously only accorded to married spouses to unmarried spouses who meet the criteria of “adult interdependent partners” (AIPs). This legislation will apply to AIPs who have not begun living separate and apart and have not become former AIPs before January 1, 2020, and to married spouses separating on or after January 1, 2020.
Prior to the Family Property Act, there was little predictability in how the assets and liabilities of spouses in a “common-law” relationship would be divided upon separation. This legislation attempts to address that gap in the law between married and unmarried spouses.
The Adult Interdependent Relationships Act, which is referenced in the Family Property Act, outlines three possible ways for an adult interdependent relationship to arise:
The spouses have entered into a written Adult Interdependent Partner Agreement;
The spouses have lived with each other in a “relationship of interdependence” for at least 3 consecutive years; OR
The spouses have lived with each other in a “relationship of interdependence” for less than 3 years, but the relationship is of some permanence and there is a child of the relationship either by birth or adoption.
A “relationship of interdependence” is defined in the Adult Interdependent Relationships Act as a relationship outside of marriage in which two people: (a) share one another’s lives, (b) are emotionally committed to one another, and (c) function as an economic and domestic unit. All three conditions must be satisfied for the interdependent nature of the relationship to be established. To determine whether spouses function as an economic and domestic unit, all of the circumstances of the relationship must be taken into account, including:
- Whether or not the persons have a conjugal relationship;
- The degree of exclusivity of the relationship;
- The conduct and habits of the persons in respect of household activities and living arrangements;
- The degree to which the persons hold themselves out to others as an economic and domestic unit;
- The degree to which the persons formalize their legal obligations, intentions and responsibilities toward one another;
- The extent to which direct and indirect contributions have been made by either person to the other or to their mutual well-being;
- The degree of financial dependence or interdependence and any arrangements for financial support between the persons;
- The care and support of children; and
- The ownership, use, and acquisition of property.
If unmarried spouses meet the above criteria, they qualify as AIPs and can access the property distribution scheme set out in the FPA upon separation. Similar to married spouses then, there will now be a presumption of equal division of non-exempt property upon breakdown of an AIP relationship. The FPA also codifies the valuation date for the family property as being the date of trial unless the parties enter into a written agreement that follows the legislative requirements and sets out another date of division (such as the date of separation). There are some circumstances in which the court will consider what is “just and equitable” in the division of property, but in most circumstances, the non-exempt property is divided on a 50/50 basis.
If either married or unmarried spouses want to contract out of the property division scheme specified by the FPA either by entering into a Cohabitation or Pre-nuptial Agreement prior to commencing the relationship, or a Separation Agreement upon a breakdown of the relationship, they are free to do so. However, the FPA specifies that parties must receive independent legal advice prior to entering into the Agreement for it to be legally enforceable.
Although the property division provisions for married couples remain largely unchanged, the FPA does depart from previous rules surrounding exempt property. Under the Matrimonial Property Act, the fair market value of property owned by the spouses at the time of entering into the marriage was considered exempt from distribution. However, the FPA specifies that it is the fair market value of property owned at the time the “relationship of interdependence” arose that will be considered exempt. This means that the period of sharing starts at the date the relationship of interdependence commenced, and not the date of marriage or when unmarried spouses became AIPs. For further clarification then, while it may take three years for an adult interdependent relationship to arise (assuming there are no children of the relationship) in order for parties to access the FPA, property may be divided going back to the very first day of cohabitation.
Unlike divorce, a breakdown of a relationship between AIPs is not always as clear-cut. As per the FPA, partners become former AIPs when:
- They live separate and apart for one year and one or both of the partners intend that their relationship as AIPs not continue;
- One of the partners marries or enters into an adult interdependent relationship with a third party;
- The partners sign a written agreement stating that they intend to live separate and apart without the possibility of reconciliation; OR
- One or both of the partners have obtained a declaration of irreconcilability under the Family Law Act.
Importantly, an AIP will only have two years from the date they first knew or ought to have known that he or she had become a former AIP to bring a claim under the FPA. In other words, if a partner does not file a claim against their ex within two years, they will have missed their limitation period to file a claim. However, in situations where an AIP is giving away or selling property specifically to defeat a property claim, an action must be commenced within one year from the date the property was first dissipated. For married spouses, If a divorce judgment has been granted, or if spouses are separated but not yet divorced, any application for property division under the FPA must be made within two years. However, an application to divide family property can be made in conjunction with divorce proceedings, and this would reboot the limitation period.
Another important right extended to unmarried spouses under the FPA is the ability to make a stand-alone application for exclusive possession of the family home. Previously, if an unmarried spouse wanted to make an application to the court to have exclusive possession of the family home, the application had to be coupled with an application for partner support pursuant to the Family Law Act. If partner support was not applicable, an AIP would not have the grounds to apply to have their partner removed from the home (in the absence of family violence). Bringing AIPs into the FPA addresses that inequity.
Similarly, extending the provisions of the FPA to AIPs addresses a discriminatory gap in legislation surrounding the division of pensions. It had been established years ago that unmarried spouses should receive pension benefits upon the death of their partner; however, a significant number of provincial pension acts permitted only married spouses to divide pension benefits upon a breakdown of the relationship. Neither a court order nor an agreement between the partners could override these provisions. By gaining access to property division legislation, AIPs can now divide pension benefits upon separation as easily as married spouses.
While the FPA eliminates some of the barriers facing AIPs upon a breakdown of their relationship, introducing this new legislative scheme will inherently create uncertainty in this time of transition.
Please do not hesitate to contact us at 780-482-7691 and/or firstname.lastname@example.org should you wish to speak with any of our family law lawyers regarding the new legislation and how it might apply to your situation.
NOTICE TO READER: The summaries of legal rights and remedies described above are general references to the Alberta laws existing at the date of the publication and may not apply to the reader’s individual circumstances. Also, the laws may change. These legal summaries are not to be relied upon as applicable to your individual circumstances and are subject to a complete review of the facts and applicable laws in every case
- If parties do not qualify as AIPs and therefore do not fall under the provisions of the Family Property Act, property may still be divided between them according to the principles of unjust enrichment. Please read “Common Law’ Relationships: Understanding the Differences Between Married and Unmarried Spouses in the Family Law Context” for further information.
- Adult Interdependent Relationships Act, RSA 2002, A-4.5, [AIRA] s. 3(1).
- AIRA, s. 1(1)(f).
- AIRA, s. 1(2).
- Certain types of property are considered exempt from division under the Family Property Act, including the fair market value of property owned prior to the relationship of interdependence, inherited property, gifts from third parties, and motor vehicle accident settlement proceeds, among others. Further, growth in value of exempt property might not be distributed according to a 50/50 basis.
- E.g., property acquired by a spouse after a decree nisi of divorce has been obtained, or property acquired by an AIP after becoming a former AIP. Please see Family Property Act, RSA 2000, c M-8 [FPA], s. 7(3) for additional examples.
- Please read “Independent Legal Advice: What is It and Why Do I Need It?” for further information.
- FPA, section 1.1(1).