The Family Property Act – What is it, and why does it matter to you?
On January 1, 2020, the Family Property Act will replace Alberta’s Matrimonial Property Act, RSA 2000 c M-8 pursuant to the Family Statutes Amendment Act, 2018 Chapter P-31. The biggest takeaway from this legislative change is that unmarried couples who meet certain requirements will now have property rights very similar to those of married spouses upon separation. The Family Property Act will apply to all married couples and unmarried couples who meet the criteria within the legislation, unless they opt out by entering into a legally enforceable agreement.
What does this mean for you and your partner?
1. Unmarried Couples
Prior to these legislative changes, married couples’ property rights were governed by the Matrimonial Property Act. Unmarried couples, often referred to as “common law” couples, had no legislative system to guide their property division. Under the old system, if an unmarried person wanted to claim property rights when their relationship ended, they could only do so through common law remedies including the law of unjust enrichment, trusts and quantum meruit.
The common law remedies available to unmarried couples caused uncertainty in recovery, as well as potentially challenging legal burdens to overcome to establish a claim. For example, to establish a claim under the law of unjust enrichment, a person has to show that due to their contribution to the relationship 1) the other partner was enriched; 2) the person making the claim for unjust enrichment suffered a corresponding deprivation; and 3) there was no reason in law for that deprivation (see Kerr v Baranow, 2011 SCC 10 for more information regarding the law of unjust enrichment). In addition, the question of any damages for claims in unjust enrichment caused issues as those claims could be significantly less than what a comparable relationship would allow for if those parties were married under the Matrimonial Property Act.
Once the Family Property Act takes effect, unmarried couples who meet the requirements of the Family Property Act will be subject to the same property rights, entitlements and division schemes as married couples upon the breakdown of their relationship. The Family Property Actwill apply to couples who meet the definition of Adult Interdependent Partners (see s.3 of the Adult Interdependent Relationships Act, Statutes of Alberta, 2002 Chapter A-4.5).
Not all unmarried couples are Adult Interdependent Partners. The Adult Interdependent Relationships Act defines an “Adult Interdependent Partner” as someone who has:
- lived with another person in a relationship of interdependence for a continuous period of no less than 3 years, or
- for some permanence if there is a child of the relationship (either by birth or adoption), or
- if the person has entered into an adult interdependent partner agreement with the other person under section 7 of the Adult Interdependent Relationships Act.
- This is the only way that relatives (either biological or through adoption) can become Adult Interdependent Partners.
A “relationship of interdependence” is defined by section 1(f) of the Adult Interdependent Relationships Act as a relationship outside of marriage in which any two persons:
- share one another’s lives;
- are emotionally committed to one another; and
- function as an economic and domestic unit.
According to the new legislation, if you are considered an Adult Interdependent Partner, and you separate on or after January 1, 2020, or become former Adult Interdependent Partners after January 1, 2020, then the Family Property Act applies, unless you have entered an agreement that says otherwise.
As you may have realized, whether two parties are considered Adult Interdependent Partners remains uncertain. It is often not clear when two people become Adult Interdependent Partners. Unlike marriage, which is marked by legally binding paperwork and a ceremony, there is often no definitive moment or decision to become Adult Interdependent Partners. Therefore, it is important to recognize that assessing whether you are in a relationship of interdependence is a fact specific determination that must take into account a wide range of factors including:
- The extent to which you cohabitated (full-time, part-time, a few months a year, a few nights a month?);
- The extent to which your financial lives are intertwined (do you have joint bank accounts, do you each pay your own bills with absolutely no overlap, do you share the cost of groceries, does one partner shoulder all finances?);
- The extent to which your social lives are integrated, and the extent to which you hold yourselves out to others as a couple (do you attend parties together, do you invite the other party home for Christmas, do other people think you are a couple, do you parent one another’s children, do you participate as a member of your partner’s extended family?);
- The extent to which your relationship was monogamous; and
- A number of other elements.
If you are unsure whether you and your partner are considered Adult Interdependent Partners, you should consult a lawyer for further advice and information.
2. Married Couples
For married couples who separate before January 1, 2020, the old Matrimonial Property Act will continue to apply, unless they agree otherwise. For married couples who separate on or after January 1, 2020, the Family Property Act will apply.
Married couples who were not in a relationship of interdependence prior to the marriage will not see much of a change as a result of the Family Property Act.However, the Family Property Act will impact the rights of married couples who lived together in a relationship of interdependence prior to their marriage. Under the Family Property Act, if couples lived together in a relationship of interdependence before marriage, upon the end of their marriage, the period of property division would extend back to the beginning of the relationship of interdependence, even if that pre-marriage relationship of interdependence was for less than 3 years.
For example, what this means is that if you began living with your partner in a relationship of interdependence in December 2015, got married in December 2017, and then separated and finalized your divorce in December 2020, the entire period from December 2015 to December 2020 would be subject to the Family Property Act. Even though the relationship of interdependence prior to marriage did not last for more than 3 years, the property division will still extend back to the beginning of that period of interdependence.
What can you do to protect your rights under the Family Property Act?
The new Family Property Act is an opt-out regime. If you and your partner are Adult Interdependent Partners and you determine that you do not want the Family Property Actto apply to the division of your Family Property, then you must enter into an agreement formalizing those terms, and that agreement must adhere to the requirements of the Family Property Act.
Agreements dealing with property rights between partners can take the form of cohabitation agreements (entered into by couples who do not have any immediate intention to marry), prenuptial agreements (in contemplation of an upcoming marriage), or postnuptial agreements (entered into after the marriage has already occurred).
If you are interested in entering into a cohabitation, pre-nuptial, post-nuptial or Adult Interdependent Partner agreement, or would like to learn more about the Family Property Act and what this legislation means for you, please contact our Family Law Section for further information.
The new legislative changes under this new regime will bring in a period of uncertainty with respect to division of property as well as spousal support. It is important to remember that the area of family law is highly fact-specific and each individual situation will warrant specific advice.