Division of Property and Assets – FAQs
For common-law couples, there is no entitlement to division of property and assets, as there is with married couples. Part 1 of the Family Law Act, which provides for the equal division of financial gains made during a marriage, applies only to married couples. This means that each common-law partner is entitled only to what he or she brought into the relationship or acquired during it.
The Supreme Court recently affirmed that the failure to extend property equalization regimes to unmarried, cohabiting spouses is constitutionally valid. Unmarried couples seeking such protections are free to marry, or to form their own contracts providing for such division.
If you feel that you have contributed extensively to the value of a certain asset that belongs to your partner (a home in which you lived, or a pension or savings account, for example), and that it is therefore unjust for your spouse to retain the full value of that asset, you can make a claim for a constructive trust, to remedy unjust enrichment. A constructive trust gives the beneficiary a right to property in a particular asset, such as the matrimonial home. See the article Common-law Relationships and Division of Property for more details.
Litigation in this area can be difficult and complex. If you want to pursue this type of claim, you should consider retaining a lawyer experienced and knowledgeable in this area. Unjust enrichment claims are very fact specific, and an experienced lawyer will best be able to make the arguments necessary to support your claim.
See the article Common-law Separation for more information about the rights of common-law couples upon separation.
No. Conduct during the marriage and the reason for its dissolution are not relevant to the division of property. Canada has a “no fault” divorce system, meaning that the court will not consider conduct within the marriage when making decisions regarding separation, divorce, support, child custody and access, or any other matter arising from your relationship breakdown.
If your spouse acted unconscionably in regard to certain assets, for example, by lying deliberately, depleting assets before separation, or recklessly incurring debts (for example by gambling), or lying about debts or liabilities at the time of marriage, section 5(6) of the Family Law Act provides that the court has discretion to vary the equalization payment if equal division of assets would be unconscionable. That unconscionability, however, must relate to one of the specific examples listed in that section, or other circumstance “relating to the acquisition, disposition, preservation, maintenance or improvement of property.” Conduct not related to property, such as cheating, or even cruelty, do not entitle the other spouse to a larger share of the net family property.
If you do go to court to have your property matters decided, the court will equalize your family property in accordance with the Family Law Act. Under s. 4(2), any property that the spouses specify in a domestic contract should be excluded from valuation date property, will be excluded. Otherwise, the court does not have discretion, except in exceptional circumstances, to deviate from the property equalization regime in accordance with your wishes.
There is no obligation for you and your spouse to go to court, or to divide your net family property as it would be divided under the Family Law Act. You are free to decide on the division of your property as you choose, and then incorporate your decisions into a separation agreement formalizing your arrangement. You can create your own separation agreement, or seek the help of lawyers. It is advisable that you get legal advice before finalizing any property sharing agreement, particularly if the marriage has been a lengthy one and you have built up considerable assets during that time.
Mediators can also help you arrive at an agreement, or an arbitrator can decide how to divide your property, either by applying the Family Law Act or based on your wishes.
See the article Going to Court versus Going to Trial – Clearing up the Confusion for more information on the difference between a trial and other court appearances.
Under the law, if you are married and are seeking an equalization of net family property, money in joint accounts is half yours, and your spouse is not allowed to spend your half of the money. If you think your spouse is spending your joint funds recklessly after separation, you have a couple of options as to how to deal with this issue.
The first is to wait. If you have a court date coming up in which the court will deal with the equalization of net family property, or if you and your lawyers or a mediator are in the process of negotiating an equalization of property, you should keep careful records of the balance of the joint account at the date of separation, your spending from that account, if any, and your spouse’s withdrawals. Then, when it comes time to equalize property, you can ensure that the court, or the lawyers or mediators, use the separation date balance to calculate the equalization payment.
In other words, if the balance of that account was $50,000 at the date of separation, then half of that would be considered yours for the purposes of all calculations. If your spouse has since spent $10,000, that does not affect the $25,000 that would still be counted as yours. Your spouse is essentially only spending their own money, and since the spending took place after separation, it will have no effect on the actual calculation of net family property.
However, if your spouse’s spending is depleting not only their half of the account, but also yours, or if you think their spending will interfere with their ability to pay you the equalization payment you will be entitled to, then you should act now.
If you have not yet sought equalization of net family property, you should do so immediately, and at the same time, apply to the court for a non-depletion order under s. 12 of the Family Law Act (FLA). Under that section, the court can order either that the spouse deliver up specific assets to the court for possession and safe-keeping, or that the spouse refrain from depleting assets. The purpose of this section is to ensure that there will be funds available to make any required equalization payment once it is ordered. The court will act under this section if it believes there is a real risk that the spouse’s spending will frustrate the equalization process.
If you have already applied to the court for equalization, you can also now apply under section 10 of the FLA for a determination of a question of title. In other words, you can ask the court to determine that you own the property your spouse is depleting. At the same time, you can apply for a non-depletion order under section 12, as indicated above. That way, if the court determines that you own funds your spouse is spending, it will simultaneously order your spouse to refrain from depleting them.
If you have not been able to prevent your spouse from depleting assets to which you are entitled, then when it comes time for the court to calculate equalization, you should apply under s. 5(6) of the FLA to vary the equalization payment to take into account your husband’s or your wife’s post-separation depletion of assets. If you can show to the court that under the equalization calculation you are being credited for having assets which in fact your spouse has since depleted, the court can order the spouse to repay your half of any assets that were depleted. The court can order a higher equalization payment to take into account the inappropriate spending that took place post separation, or, if you would owe your spouse money under the equalization process, the court can reduce or eliminate your need to pay your spouse, in order to compensate for the spending that took place.