Posted: May 13, 2021
By Brittany Goetz, Associate, and Tracy Zimmer, Student-at-Law
Effective January 1, 2020, Alberta replaced the rules surrounding the application of property rights upon the dissolution of a relationship. Previously, the Matrimonial Property Act set out the rules regarding property division, but these only applied to married couples. Alberta has now enacted the Family Property Act (the “Act”), which extends the rules dictating property rights to non-married couples and applies to relationships that end after December 31, 2019.
So, what do these changes mean to you and why do we bring them up over a year later?
It is important to be reminded of these changes as the Act may have a significant impact on you and your partner. Many non-married couples are unaware that these rights and obligations are now automatic upon certain conditions being met.
1. Pursuant to the Act, you no longer need to be married to have rights to your partner’s property and assets.
2. The Act dictates how property, assets, and debts are divided upon the breakdown of a relationship.
3. There is now a presumption of equal division of property for non-married couples as there has been for married couples.
- This means that if property is acquired after the beginning of your relationship, your partner may have equal rights to that property, regardless of whose name it was purchased under.
- This also means that you may be liable for debts incurred by your partner and vice versa.
What are the conditions for the Act to apply to non-married couples?
1. The Act applies to both married couples and non-married couples separated after December 31, 2019.
2. In Alberta, non-married couples are legally referred to as Adult Interdependent Partners (“AIPs”). AIPs are two people who have lived together in a relationship of interdependence:
- for at least 3 years, or
- of some permanence (and less than 3 years) if the couple has a child, or
- who have entered into an adult interdependent partner agreement.
3. The relationship ended after December 31, 2019.
What are the key points that you need to know?
1. Both partners have two years from the date they knew the relationship ended to make a claim for property division.
2. Property, assets and debts acquired prior to the relationship, are typically exempt at the value at the time the cohabitation began. Inheritances, damages in tort, third party gifts and proceeds of certain insurance policies, even if acquired during the relationship, are also typically exempt at the value when they are received.
- This means that you and your partner are not entitled to the full value of each other’s property which was brought into the relationship – the same goes for debts that were brought into the relationship.
- However, you may each be entitled to any increase in the value of the exempt property. For example, any increase in the value of exempt property during the relationship may be subject to equal property division. If you inherited a cottage prior to the relationship and it was worth $100,000.00, and it increased in value to $120,000.00 during the cohabitation – the original $100,000.00 is exempt, however, your partner may be entitled to an equal division of $20,000.00.
3. As a shared residence is often one of the most immediate property related concerns of separated AIPs, the Act states that exclusive possession of any property leased or owned by one or both AIPs, or that has been lived in together, can be granted solely to one of the former AIPs through the Court. In other words, this can protect an AIPs right to reside in the family home. Exclusive possession does not affect the right of the excluded spouse to a division of the equity.
Are there alternatives to the automatic property rights granted in the Act?
If you and your partner decide that you do not want the Act to dictate the terms of your property division, then you may enter into a Cohabitation Agreement that sets out how you wish for your property, assets, and debts to be divided upon your separation. However, this agreement must be entered into prior to the dissolution of the relationship.
Many couples avoid Cohabitation Agreements out of concern that such a discussion may upset one another or because it may be difficult to consider the end of a relationship when things are going well. However, Cohabitation Agreements can also be pursued out of love and respect for each other and wanting to ensure that your loved one is protected, as much as ensuring that your own interests are protected.
How can we assist you?
We can assist you in entering into a Cohabitation Agreement and ensure that it is worded in a way that best reflects both your and your partner’s intentions regarding the division of your and your partner’s property, assets and debts. Whether you wish to enter into a Cohabitation Agreement or if you have any questions about your property rights and obligations, please feel free to contact our Family Law Practice Group. Our team can work with you to help ensure that you are making the most informed decision.