In Alberta, when a married couple divorces, the way in which their property is divided is governed by the Matrimonial Property Act, RSA 2000, C.M-8, and other legislation. This legislation provides a framework for determining which assets are to be divided between the spouses, the value of those assets, possession of the family home, etc. However, for non-married couples, there is currently no such legislation in place. Rather, non-married couples must rely on a variety of legal doctrines, such as unjust enrichment and constructive trust, in order to determine the division of their assets. This results in unpredictability in how assets will be divided, adding uncertainty to an already difficult time. In late 2018, in an effort to simplify matters and provide some guidance for the division of property for non-married couples, the Alberta government introduced Bill 28, which will become effective on January 1, 2020.
Bill 28, the Family Statutes Amendment Act, 2018, will apply to both married couples and to non-married couples who meet the definition of “adult interdependent partners” (“AIPs”) (defined below) on January 1, 2020 or later. The main effect of Bill 28 is to bring AIPs into the provisions of the Matrimonial Property Act, providing AIPs with a scheme for the division of their property on a breakdown of the relationship. As a signal of this change, Bill 28 changes the name of the Matrimonial Property Act (the “old Act”) to the Family Property Act (the “new Act”). Most of the provisions for AIPs in the new Act essentially mirror the provisions that are currently in place for married couples.
The full range and detail of changes contained in the new Act are beyond the scope of this article, but a few key provisions, as they apply to AIPs, are outlined below. If you have questions or are concerned about how the new Act may impact you or your relationship, you should seek legal advice from a qualified practitioner.
AIPs – Definitions
AIPs are people who have: (i) lived together in a relationship of interdependence for at least three years; (ii) lived together in a relationship of interdependence of some permanence (can be less than three years) and have a child together; or (iii) entered into an adult interdependent partner agreement. A “relationship of interdependence” is defined as a relationship outside marriage in which any two people share one another’s lives, are emotionally committed to one another, and function as an economic and domestic unit.
A breakdown of a relationship between AIPs is sometimes not as clear-cut as a divorce or other circumstance applicable to married (or formerly married) spouses. Under the new Act, AIPs will be considered former AIPs in a number of circumstances, including upon entering into a written agreement to that effect, having lived separate and apart for more than one year with at least one of the partners intending that the relationship as AIPs not continue, or one of the AIPs marrying a third party. For ease of reference, these and the other circumstances outlined in the new Act will be referred to as a “breakdown of the relationship.”
Family Property Orders
The old Act permits married couples to apply for matrimonial property orders upon divorce or in certain other limited circumstances. The new Act re-names these orders, calling them “family property orders,” and broadens their scope, giving AIPs, as well as married couples, the ability to apply for such orders. An AIP may apply for a family property order in a few different circumstances, including: (i) if they have become a former AIP; (ii) they are living separate and apart from the other AIP and the other AIP has transferred or intends to transfer a substantial portion of his or her property to a third party (other than through a bona fide transaction); or, (iii) they are living separate and apart from the other AIP and the other AIP is dissipating property to their detriment. On application for a family property order, the court may determine which assets are to be divided, calculate their value, and make an order regarding the distribution of those assets between the partners in a manner that it considers just and equitable. The scheme for family property orders essentially mirrors that for matrimonial property orders under the old Act and applies similarly to both AIPs and married spouses.
Generally, for AIPs, all property acquired after the relationship of interdependence began will be eligible for inclusion in the court’s calculation of assets to be divided. However, certain types of property are exempted, including property that was acquired by an AIP before the relationship of interdependence began and property that was acquired by an AIP as an inheritance or as a gift from a third party, either before or during the relationship. For exempted assets, the value of the asset as at the date the relationship of interdependence began or the date the asset was acquired, whichever is later, is exempted from the calculation. However, any gain in value or income earned on the asset since that date is eligible to be included in the court’s calculation. Notably, even if the AIPs later marry, in calculating the value of assets to be divided, the value used remains the value as at the date of the start of the relationship of interdependence or the date of acquisition of the asset, whichever is later, as opposed to the date of the marriage.
In making a decision pursuant to an application for a family property order, the court will consider a number of factors, including the contribution made by each AIP to the welfare of the family, to property, and to a business run by one or more of the AIPs, the earning capacity and financial situation of each AIP, the duration of the relationship of interdependence, and any written agreement between the AIPs. These factors guide the court in determining what is a “just and equitable” division of assets, helping ensure that AIPs are fairly compensated for their contributions to a relationship upon a breakdown of that relationship.
Possession of the Family Home
Another significant consequence of the new Act is that a property that is owned or leased by one or both AIPs, or that the AIPs lived in as a family home, will be considered a “family home” for the purposes of the legislation. This means that on a breakdown of the relationship, an AIP now has the right to apply to have exclusive possession of the family home and may have the other AIP removed from the home and/or restrained from entering the home. If granted by the court, this type of order is registrable on title to the property, protecting an AIP’s right to the family home. Under the old Act, these rights are only available to married couples with respect to a matrimonial home.
Agreements Between AIPs
As is the case for married couples, AIPs are free to make agreements regarding the division of their property upon a breakdown of the relationship. In order for such an agreement to be valid, it must conform with the requirements of the new Act, being, essentially, that both parties must be aware of the nature and effect of the agreement, the possible future claims they may have under the new Act, and the fact that they are giving up those claims to the extent necessary to make the agreement effective. Further, each AIP must sign the agreement freely and voluntarily, without any compulsion on the part of the other AIP, and must execute the agreement in accordance with the legislative requirements.
If such an agreement is in place and is validly made, the new Act will not apply to the property dealt with in that agreement. Notably, as under the old Act, if such an agreement is made prior to marriage, it will become unenforceable upon the marriage of the parties unless it is specifically intended to continue to apply after marriage.
As noted, the summaries above provide only a brief outline of some of the key provisions in the new Act and how they apply to AIPs. There are other changes and details to these provisions that are beyond the scope of this article, including the specific application of the summarized provisions to AIPs who later marry. Nonetheless, it is clear that the new Act has brought sweeping changes to the consequences of a breakdown of a relationship between AIPs. It is now more important than ever for AIPs, or for partners who may become AIPs, to be cognizant of and to properly plan for the division of their assets on a breakdown of their relationship. If you have questions about how the new Act may impact you or how it may apply in specific circumstances, you should seek legal advice.