Relationship Property
I am often asked by my clients what they are entitled to when their relationships break down and the time comes to distribute the property that was acquired during the course of those relationships. The answer to this question depends on a number of factors, beginning with the type of relationship the particular client was in.
Matrimonial Property
Pursuant to the provisions of the Matrimonial Property Act of Alberta (“the MPA”), there is a presumption that the property acquired by married spouses during the course of their marriage, as well as pre-existing property that increased in value during the marriage, will be shared equally. In other words, the MPA requires that any matrimonial property be distributed equally, unless is appears to the Court that an equal distribution would not be just and equitable. In deciding what is just and equitable, the Court must take into consideration a number of factors, along with “any facts or circumstances that are relevant”.
One of the factors that can be raised to argue an unequal distribution is the dissipation of matrimonial assets by one of the spouses through gambling or substance abuse. What constitutes dissipation will vary according to the facts. The law appears to protect the innocent spouse from a deliberate and covert misappropriation of matrimonial funds. The case law also seems to establish that in order to establish dissipation there must be an element of bad faith or neglect. Foolish economic decisions, reckless or spiteful spending, pursuit of an elusory financial objective or squandering money on addictions are all examples taken from Alberta cases. Other cases have used the word “dissipation” to describe the broader concept of one spouse using matrimonial assets to pay for their private expenses such as legal fees, holidays, or entertainment, while the other spouse receives no benefit from the dissipation of those assets. A spouse guilty of dissipation is usually ordered to repay the money that was spent inappropriately for his or her exclusive benefit.
Certain property owned by either party at the date of marriage, and even some property that is acquired later, may also be exempt from sharing, including property acquired through an inheritance or personal injury settlement. To prove an exemption, an accounting method referred to as “tracing” is often employed. Tracing is required to determine if exempt funds that may have been comingled with joint matrimonial property can still be characterized as exempt, or whether the comingling now requires that the property be treated as joint matrimonial property to be shared because it can no longer be segregated. The law is clear that any exemption claimed must be traced to an identifiable asset.
As with any legal matter, the ultimate decision that the Court is called upon to make in a particular matrimonial property distribution will turn largely on the facts of the particular matter. More often than not, however, the parties are able to arrive at their own agreement on a matrimonial property distribution using the general principles set out above rather than requiring the Court to impose a decision on them.
In the next instalment of this article, I will examine the different legal concepts that apply to the division of property acquired by non-married couples during the course of their relationships.
Kurt E. Schlachter practices law in Lethbridge and Fort McMurray