Unequal Division of Matrimonial Property
- 20 June 2017
Under Alberta’s Matrimonial Property Act, there is a presumption that all property acquired during marriage is divided equally between the spouses, as long as the property is not exempt (see my post on exempt property). It does not matter if the property is held in joint names or in one spouse’s name alone. However, there may be an unequal division of the property if it would not be “just and equitable” to divide it equally.
In What Circumstances Would a Court Rule to Distribute Assets Unequally?
If a court is going to distribute assets unequally between the spouses, it must consider the factors listed in Section 8 of the Matrimonial Property Act. The list of factors is lengthy and it is not exhaustive, which means that the Court can consider virtually any relevant fact to determine whether property should be divided unequally.
Many people believe that the date of valuation of assets for division is the date of separation. In Alberta, this is not the case. This means that property acquired by a spouse after the date of separation is eligible for distribution under the Matrimonial Property Act. That being said, one of the factors for unequal division is whether the property was acquired after the date of separation. This means that assets acquired post-separation will likely be divided unequally, especially if the property is the product of the sole effort of one spouse. For example, in the Alberta Court of Queen’s Bench case Adams v. Adams, 2011 ABQB 306, the wife retained 100% of the assets she acquired after the separation.
Despite the example above, there is no guarantee that post-separation property will not be divided 50/50. As such, it is recommended that couples take steps to complete their property division as soon as possible after the date of separation. Ideally, when couples are able to agree, they will enter into a binding matrimonial property agreement soon after their separation. Putting this off can needlessly complicate matters and lead to unexpected results.
What Property is Exempt from the 50/50 Rule?
Many people believe that all property is automatically divided 50/50 upon divorce; however, this is not the case. Under Alberta’s Matrimonial Property Act, certain property is exempt from distribution upon divorce.
The following property is characterized as “exempt” under the Matrimonial Property Act:
- Gifts from 3rd parties
- Property owned prior to the marriage
- An award or settlement from a lawsuit
- Insurance payouts not relating to property
If property falls into one of the categories above, its value at the date of marriage or the date of acquisition (whichever is later) is generally not divided upon divorce. The increase in value of the exempt property may be divisible between the spouses.
It is important to note that in order for an exemption to be proven in court it must still exist, or the funds from the exemption must be traceable throughout the marriage. For example, if a spouse inherits a home during the marriage, sells it and acquires an investment from the sale proceeds, the investment is still exempt; however there must be evidence to show that the house was converted to cash, which was then used to purchase the investment.
It is also important to note that if an exempt property is transferred into the couple’s names jointly, a portion of the exemption may be lost. For example, if a husband owns a house prior to the marriage and upon the marriage transfers the title of the house into both spouse’s names, then his wife will likely be entitled to a portion of the house upon divorce.
An interesting Court of Queen’s Bench case regarding the tracing of exempt property is Felker v. Felker (2005 ABQB 365). In this case the husband successfully traced his exempt property throughout the parties’ relationship and marriage. During the relationship, the husband sold and purchased several herds of cattle. The herd of cattle was a different herd of cattle at the end of the marriage than it was at the beginning of the marriage. The husband was able to show that the funds used to purchase the last herd were derived from the original herd and the cattle were deemed to be the exempt property of the husband.
The family and divorce lawyers at RCMV Law in Calgary have extensive experience dealing with complex matrimonial property issues. Please call our office for a consultation to determine your matrimonial property rights.
Editor’s Note: The content above was revised on [June, 20th, 2017]