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The topics in the Dial-A-Law series provide general information on a wide variety of legal issues in the Province of Alberta. This service is provided by Calgary Legal Guidance funded in part by the Alberta Law Foundation.
This topic discusses what property is subject to the division of property under the Matrimonial Property Act The Matrimonial Property Act creates a system for dividing property on marriage breakdown. You and your spouse may agree and write up a contract on the distribution of matrimonial property or you may go to Court and ask to have your matrimonial property divided up for you. Matrimonial Property includes almost everything you and your spouse accumulated during your marriage:
- Real estate
- Pension plans
- Bank Accounts
- Business Assets
- Stocks and Bonds
- Shares in incorporated companies
- Intellectual property, such as patents and trademarks,
- Some types of life insurance
- All personal and household property
If you have employment pensions, they should be valued by a properly trained expert, such as a chartered accountant or actuary. Your children’s belongings are also matrimonial property but usually no one includes them in the property division. The parent who has primary care of the children takes their belongings. Professional qualifications or university degrees are not considered matrimonial property.
The Matrimonial Property Act has no specific section to deal with debts. Generally, debts acquired by either or both of you during the marriage are shared, unless there is a compelling reason to do otherwise.
The Matrimonial Property Act has 3 categories of property.
- Equally Shared Property
- Exempt Property
- Shareable property
First, Equally Shared Property is the type of property that most people have. It includes everything that you acquired during the marriage. It does not matter if the property is in your name or not. If you got it while you were married, the law presumes that you should share it equally. For example, if you and your spouse buy a house, and furniture and both of you contribute to employment pensions, then all of this property is to be shared equally. If you feel that the property should not be shared equally, you must have a compelling reason.
The Matrimonial Property Act lists factors that a Court should consider when deciding whether the property should be shared equally or not. The following is an explanation of these factors:
- The contributions made by you and your spouse to the marriage and to the welfare of the family. This includes paid and unpaid labour such as work as a parent and a homemaker.
- The contributions made by you and your spouse to any business, farm or enterprise owned by either or both of you. This includes businesses owned by one of you and a third party. The contribution may be made directly or indirectly to obtain, improve, or manage the asset. The contribution could be money or made in some other form such as material, equipment, or labour.
- The direct or indirect contributions both you and your spouse made to acquire your property and to the conservation or improvement of the property. The contribution can be made by money or in some other form such as labour.
- The financial resources that you and your spouse had when you got married and what you each have at the date of trial. The Court will look at income, earning capacity, debts, obligations, and other property or resources.
- The length of your marriage. The longer the marriage, the stronger the presumption of equal sharing is.
- Property acquired after you and your spouse separated. You are still married when you separate. If you have an unusually long separation, the Court may consider this a compelling reason to distribute that property unequally.
- An oral or written agreement made between you and your spouse. This agreement could be an agreement you made before the marriage.
- A situation where a sizeable gift was made by either spouse to someone else or where assets are transferred to someone else who did not pay market value for the asset.
- Any division of property made between you by gift, agreement or a Court Order.
- Court Orders concerning the division of property between you.
- The wasting or disposing of property to the other’s disadvantage.
- Any other circumstances the Court may find relevant.
While the above allows a Court much leeway, the presumption of equal sharing is a strong one, and it is difficult to overcome.
Second, Exempt Property means property that you do not have to share with your spouse. Exempt property includes gifts from third parties to one of you alone, inherited property, property that you brought into the marriage, and certain personal injury insurance proceeds or damage awards. To claim the property as exempt, you must prove that the asset still exists or the proceeds of the sale are traceable into another asset. For example, if you sold the car you owned before marriage and used the money as a down payment on a new car, the amount you contributed from the sale of your old car is exempt if you are able to trace the money into another asset. However, if you use the money to go on vacation, buy groceries, or pay the utility bills you lose your exemption because you cannot trace the money to an existing asset. You can also lose a part of your exemption if you put money from your pre-owned asset into a new asset in joint names, such as a matrimonial home.
The amount of the exemption is the value of the asset at the time you brought it into the marriage or the value it has today – whichever is lower. For example, if you inherited a car that was worth $20,000 during your marriage, but at the time of your divorce the car was worth only $10,000 then the exempt amount is $10,000. It would be worth less than it was at the time the car was inherited and the car would belong to you alone.
Third, Shareable Property is where you and your spouse have a claim to the property but there is no presumption of sharing it equally. Shareable property includes the increase of value from your exempt property or what you may purchase with the increase of value or income. For example, if you had an old car you purchased for $500 before you were married and the old car is now considered an antique worth $5,000 then the increase is of $4,500 is probably shareable. Your spouse could make a claim for the increased value. The Court would make its decision based on the previously discussed factors. You would be entitled to the exempt amount of $500 as property you brought into the marriage. The value is set at what it was at the time of marriage because that is the lower amount. Shareable Property may also include any property you or your spouse acquired after the separation and any gifts exchanged between the two of you. The whole area of exempt property, tracing and gifting is complex. If you have this type of property, you should consult a lawyer to make sure you divide everything fairly.