What’s Changing in Property Division in Family Law?
January 1, 2020 marks the implementation of changes to Alberta legislation governing property division when a relationship breaks down. Alberta’s Matrimonial Property Act currently only applies to the division of property for married couples. In January that will change and common-law couples, known as Adult Interdependent Partners (or “AIPs”) will be encompassed in the legislation which will now be titled the “Family Property Act”.
What was happening before?
This is not to say that AIPs did not have property rights previously. They did. However, the determination of such claims were grounded in common law doctrines known as unjust enrichment, constructive trusts and resulting trusts. There was no governing legislation to provide clearer guidance in how much entitlement a partner may have to the other partner’s property or debt. As a result, decisions in these cases would vary significantly, were often drawn out, costly and subject to a wide range of discretion by the Courts hearing the cases. This compromised the ability of family law lawyers to give clients a solid understanding of the likely results of their case if the matter was to proceed in Court and what a fair and equitable settlement should look like. Consequently, it was more difficult for AIPs to pursue their property claims in comparison to married couples.
Moving into 2020, both AIPs and married couples will be subject to the new legislation. In general, with some rare exceptions, there will be an equal division of property and debt accumulated during the relationship. The legislation will also continue to provide for property not subject to division called “exemptions” which include inheritances, gifts, pre-relationship property, some insurance proceeds and a settlement award for damages.
What if we want something different?
Property legislation does and will continue to allow spouses/partners the ability enter into their own property division agreement rather than follow the rules in the legislation. Such agreements may be negotiated or agreed between the partners on separation. However, waiting until the end of the relationship obviously comes with the high likelihood of disagreement which in turn leads to increased legal fees and often costly litigation in the court process.
Preventing Stress: Cohabitation and/or Prenuptial Agreements
Planning ahead at the beginning or during the course of a relationship or marriage to reach an agreement on the division of property if things were to fall apart is the best preventive measure to address the possibility of conflict, disagreement and costly litigation at the time of separation. Though some couples dismiss this approach on the basis that it has the appearance of distrust, more and more couples today are realizing that entering into a Cohabitation/ Pre-nuptial Agreement is simply good planning. These Agreements eliminate much of the worry and anxiety about what might happen if one or both parties decide to end the relationship and how much it might cost. Negotiating and entering into a Cohabitation Agreement is reflective of educated and intelligent planning for the future and should be at the forefront of importance for a family in the same way as preparing for a wedding, children, financial advice and investing, having a will or estate planning.
How do I start?
If you are entering or already in a committed relationship or marriage and would like information on what a Cohabitation or Prenuptial Agreement would involve, seek the advice of a family law lawyer.