How to Divide Property in a Separation or Divorce

One of the most difficult and confusing issues to deal with in a separation can be how to divide the property that has accumulated during the relationship.  It isn’t always immediately clear what property needs to be divided or how that division is to take place.  As well, the laws for dividing property for married couples are significantly different than the laws for couples who were not married.

In a divorce, the property accumulated during a marriage is divided as per the Matrimonial Property Act.  This Act sets out that the starting point for dividing the property that has been accumulated during a marriage is division on an equal, 50/50 basis.  This includes all property that was accumulated during the marriage, including the matrimonial home and other real estate, bank accounts and investments, business or corporate interests, and pensions.  Debts that were accumulated during the marriage are also divisible.  It does not generally matter in whose name the property was purchased or registered.  In most instances, matrimonial property in Alberta is divisible up to the date of the agreement, court order or divorce, and not as per the date of separation.

In certain circumstances, some property is exempt from the equal division.  Often termed “exempt property” or simply “exemptions”, this includes property owned by one spouse solely prior to the marriage, gifts received by one spouse solely from a third party, inheritances to one spouse solely, an award in damages from a lawsuit by one spouse solely and proceeds from an insurance policy, provided that the proceeds were not property related and were for one spouse only.  However, in certain situations, exempt property can lose its exempt status.  If the property is put into joint names with the other spouse, or if the property is disposed of, this can impact or eliminate the exemption.

In common law separations, there is no presumption of a 50/50 distribution of property accumulated during the relationship, as the Matrimonial Property Act does not apply.  Instead, each party is generally entitled to get back what they individually or jointly contributed.  Each party is entitled to the property they owned when they came in to the relationship but each party is also entitled to compensation for contributions they made to the other party’s property or to jointly-owned property.  These contributions can be difficult to establish, as a court can consider not just monetary contributions, but also improvements to property, how the property was maintained or whether the parties were involved in a “joint family venture.”   If one party’s role in the relationship freed the other party to pursue opportunities or obtain property, the contributions involved in assuming that role are also considered.  Sometimes this works out to an equal distribution of the property, but this is not always the case, and the parties, or in certain situations the courts, have a wide discretion to divide and resolve matters as they see fit.