General information.
Property division if you are married.
Common law couples - property division
General Information
Property Division rules apply differently to couples who are married, and
couples who are living common law. If you are splitting up with your
spouse/partner, you each have rights to certain property, and obligations to
your former spouse/partner to share certain property. Many people are often
unaware of these legal rights and obligations simply because we generally don't
organize our personal lives in a manner to achieve specific legal consequences.
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Property division if you are married.
If you are married, most provincial statutes (which govern the division of
property for married couples) presume that each spouse is entitled to a
one-half interest in all family assets. This doesn't mean that each spouse will
get have of everything. Not every asset is a "family asset", and not every
division of property is an equal division. How property division will take
place depends on your individual circumstances.
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What is a family asset?
A family asset is generally considered to be property owned by one or both
spouses, or a minor child of either spouse, which is used for (or intended to
be used for) a family purpose. In addition to what you might think of as
obvious family assets, there are other not so obvious properties, which a court
may conclude are family assets. Some examples of such property are:
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Real estate holdings.
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Shares in a corporation.
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An ownership interest in a trust.
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Property, which a spouse has a power of appointment over, which is exercisable
in favor of himself or herself.
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Financial assets, such as money in an account, bonds, etc. which are held or
used for a family purpose.
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An annuity, pension, home ownership or retirement savings plan.
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Any other property which, when considered by the court, is found to be a family
asset.
The bottom-line is that you want to determine what family assets you have, and
what value they have. It is those family assets, which are subject to the one
half interest (division) presumption.
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Challenging the one half interest
presumption.
The presumption that each spouse is entitled to a one half interest, can be
challenged. The court may take into accounts several factors in determining
whether there should be a one half interest, or some other apportionment
(either greater or lesser) of property, including:
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The duration of the marriage,
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How long the spouses have lived separate and apart.
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The date that the property was either purchased or disposed of.
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Was the property acquired as part of an inheritance or as a gift?
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The needs of each spouse to become or remain economically independent and self
sufficient, and
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Any other circumstances relating to the purchase, maintenance, improvement or
use of the property or the capacities or liabilities of a spouse.
In other words, the court will examine all of your individual circumstances to
determine whether or not the presumption of crating a one half interest in the
property should apply or not.
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Family assets may be reapportioned.
Family assets are most commonly reapportioned (i.e. the presumption does not
apply) when:
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The marriage was of a short duration, and one of the spouses brought the
majority of the assets into the relationship.
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One of the spouses was responsible for racking up a lot of debts, which were
not related to the family.
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Some assets are located outside of the jurisdiction.
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One of the spouses requires more than half of the family assets to become
independent; and
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One of the spouses has wrongfully disposed of family assets.
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The bottom-line if you are married.
An experienced family law lawyer can help you sort through what is likely to be
considered a family asset (and subject to the one half interest presumption),
and what assets are likely to be reapportioned. An objective point of view,
coupled with legal training, can assist you in coming to a fair and equitable
division of property with your spouse.
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Common law couples - property division
Unmarried cohabitants have similar needs to their married counterparts when a
relationship comes to an end.
Although there have been significant changes in applicable laws which have
extended many of the rights and obligations of married couples to common-law
couples, there are still very significant differences.
If you are in a common-law relationship, you must be aware of the following:
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The one half interest presumption does not
apply
Unlike marriage, there is no presumption that assets should be divided equally
at the end of a common-law relationship. There are, however, methods by which
married rules regarding division of property may apply to common law couples.
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Some jurisdictions use a temporal test, (I.e. after so many years of
cohabitation, the married rules apply).
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Alternatively, couples may enter into a written agreement (a domestic contract)
about how they will manage or divide their assets.
In cases where married rules do not apply, common-law asset division is based
on the law of trusts to establish their claim. The spouse/partner who does not
have legal ownership of the property (i.e. their name is not on the title or
ownership documents) must prove they deserve a share of the property.
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An example of how the law of trusts works
The principle common law trust remedy, which allows one common-law partner to
share in assets owned by the other, is the doctrine of the "constructive
trust."
The essential requirements of this doctrine are that:
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One party has gained an unfair benefit.
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The other party has been deprived in some way related to the unfair benefit;
and,
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There is no legal reason why the first party gained the benefit.
Take, for example, a couple that has a very traditional, domestic
relationship. Partner A works while partner B stays home and maintains the
household. Partner B does the cooking and the cleaning. Partner A gets the
benefit of Partner B's domestic services, which saves Partner A from having to
hire a cook and a housekeeper. At the same time, however, Partner B could have
sold exactly those services to someone and been paid for them. Partner A
benefited from Partner B's services, and Partner B was deprived of the payments
he/she would have received for his/her services on the open market. Partner B
argues that he/she should be able to share in Partner A's property.
While constructive trusts can establish an interest in an asset, they can be
difficult to prove and can be disappointingly small. For example, the court
might look at the above circumstances and Partner B and say: "You didn't pay
any rent during your relationship with your partner. You got free room and
board in exchange for your chores. We are going to take that value (free room
and board) from your interest in Partner A's assets."
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How long does it take to establish my
interest in property?
There is no set length of relationship that must be met in order to make a
successful claim under this doctrine. In general, the longer the relationship
is, the more likely your claim will be to succeed. In most jurisdictions, this
doctrine applies to both opposite sex and same-sex couples.
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The bottom-line if you live common law.
Because the one half interest presumption does not apply, it can be much more
complex when determining how property should be apportioned between common law
couples. If you are contemplating entering into a common law relationship, or
even if you are already in one, it is a good idea to consider entering into a
domestic contract.
If you have been in a common law relationship that is ending, a family law
lawyer can review the circumstances of your relationship with you, and help you
determine what a fair apportionment of property should be, and help you get it.
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