On January 1, 2020, the Family Property Act became law and the way that unmarried couples divide property changed in Alberta.
What has changed?
Many unmarried couples will be treated like married couples upon separation. Each party is now entitled to 50% of the assets that were accrued during the relationship.
But wasn’t that already the case in Alberta? Not really.
Historical Context - The Joint Family Venture
Prior to January 1, 2020, the test to divide property was: Are you in a “Joint Family Venture”?
To determine if you were in Joint Family Venture, the Courts considered the following factors, which focused on your economic integration:
The mutual effort of the parties and whether the parties worked collaboratively towards common goals? For example:
Did they work to buy a house together?
Did they run a business together?
The degree of economic interdependence and integration that characterized the parties’ relationship? For example:
Did they share bank accounts? Expenses?
Was one party responsible for household duties and the other the primary income earner?
The intent of the parties to be engaged in a Joint Family Venture? For example:
Did they operate as a family unit? Or were they trying to keep their financial lives separate?
The extent to which both parties had given priority to the family and decision making? For example:
Did the parties make decisions with the family’s best interests in mind?
Did the parties forgo individual opportunities, in favor of opportunities in the family’s best interests?
Proving that you were in a Joint Family Venture was challenging. If you could establish there was a Joint Family Venture, you then had to show what portion of the assets you were entitled to from 0% - 50%.
Cases which divided the assets on a 50/50 basis were rare and we often saw 30/70 divisions.
These cases were tough to prove, expensive to litigate, and worse, as a claimant, if you were unsuccessful, you could be subject to costs.
What did this mean in practice?
You needed a strong case and substantial familial assets to make running this type of application worthwhile. We rarely encountered these cases.
The New Approach
The new test in Alberta is: Are you Adult Interdependent Partners?
For most people, the test essentially is:
Are you dating, living together and have a child together; OR
Are you dating, living together and have lived together for more than 3 years. (AIRA 3(1))
If so, then you are likely Adult Interdependent Partners.
What is “dating”?
The Adult Interdependent Relationships Act refers to a “relationship of interdependence” and considers whether you:
share one another’s lives;
are emotionally committed to one another; and
function as an economic and domestic unit
In addressing the third factor, the Act considers:
(a) whether or not you have a conjugal relationship;
(b) the degree of exclusivity of the relationship;
(c) your conduct and habits in respect of household activities and living arrangements;
(d) the degree to which you hold yourselves out to others as an economic and domestic unit;
(e) the degree to which you formalize your legal obligations, intentions and responsibilities towards each another;
(f) the extent to which direct and indirect contributions have been made by either of you to the other or to your mutual well‑being;
(g) the degree of financial dependence or interdependence and any arrangements for financial support between you;
(h) the care and support of children;
(i) the ownership, use and acquisition of property.
Okay, we are Adult Interdependent Partners - So what?
Once you prove that you are Adult Interdependent Partners, then you are entitled to 50% of the assets which were accrued during the relationship of interdependence (FPA(7(5)). There is less risk for the Claimant in these situations, and we anticipate seeing many of these cases moving forward.
What does this mean?
The Long Term Relationship
In long term relationships, there is more certainty for the lesser asset holder. It is less risky to bring an application for a 50% share of the assets acquired during the relationship.
The Short Term Relationship
In short term relationships, this change will have unexpected consequences for most couples, particularly where there is a substantial difference in parties’ incomes.
Consider a situation where two post-secondary students are living together in a relationship of interdependence. Robin is in first year, Chris is in their final year.
While Robin finishes school the parties live the student lifestyle and share expenses equally. Chris anticipates the parties will marry one day, saves $80,000 for a wedding, a ring and a down payment on their future home.
Three years later just after Robin graduates, Robin decides the relationship is over.
What is the issue?
This is a short relationship. There is no joint venture that the parties were working towards. Chris’ savings were solely from Chris’ efforts.
Under the old approach, this does not look like a Joint Family Venture, Chris keeps the $80,000.
Under the new approach, Robin terminated the relationship, and is presumptively entitled to half of the assets acquired during the relationship.
These changes are new. Many questions will require clarification in the upcoming years. For example, in the above situation:
What if 2 ½ years after they started living together, Chris and Robin had separate residences but continued dating?
Does the outcome change if they are spending 3 nights per week at Chris’ house and 4 nights per week at Robin’s house?
What if the relationship ended at 2 years 10 months, but for financial reasons or practical reasons - like COVID-19, Robin was unable to move out of the house until 3 years and 2 months of living together? There is a benefit to Chris to prove that the relationship was over, and a benefit to Robin to show that the relationship was ongoing.
How would Chris prove the relationship had ended?
How would Robin prove the relationship had continued?
The way forward
Leaving a common law relationship has changed in Alberta. For some couples a separation will be easier, for others - things just got trickier.
In any event, entering a relationship with the knowledge of how your assets will be divided if there is a separation means you can plan accordingly. Not every situation will require an agreement.
Plan for the worst. Anticipate the best. Let us know how we can help.