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As the law on this subject is identical between same-sex and opposite-sex couples, this chapter will only provide a brief introduction to these issues. Readers are referred to the section "Family Assets" and the chapter "Unmarried Couples > Common-Law Couples" for a more information on this subject. An Overview of the Division of Assets For legally married spouses, whether opposite- or same-sex, the rules relating to the division of family assets are set out in Parts 5 and 6 of the provincial Family Relations Act. These rules are not available to couple who are not married, including common-law couples. In the case of assets that are not jointly owned, unmarried couples can only stake a claim to each other's property under the law of trusts. Married Spouses: The Family Relations Act This segment offers a brief review of property issues and must be read together with the section "Family Assets" for a proper understanding of the basics of the applicable law on this topic. Part 5 of the Family Relations Act deals with the division of family assets. Part 6 deals with the division of pensions between spouses. Pensions are family assets by definition. The basic rule of the Family Relations Act is that, pursuant to s. 56, each spouse is entitled to an equal interest in all family assets, regardless of when they were acquired and who owns them on paper. Not all assets are "family assets," of course. Some assets, like inheritances, gifts and lottery winnings, may be personal assets that aren't subject to division. Other assets, like a company car or a company computer, are "business assets" that may not be subject to division. A "family asset" is defined in s. 58 of the act as follows: Property owned by one or both spouses and ordinarily used for a family purpose by a spouse or a minor child of either spouse for a family purpose is a family asset. As you can probably see, the linch pin here is "ordinarily used for a family purpose." If the asset meets that test, it's an asset that must be shared. Things like the family home, the family car and the family bank accounts are obviously family assets. However, "family assets" can included things that are only intended to be used for a family purpose. That might include things like a vacant lot intended to be used to build a recreational home or an RRSP that is intended to be used for retirement. To make things a bit more complicated, an asset that is a personal asset normally exempt from division can become a family asset if it winds up being used for a family purpose. Say, for example, an inheritance is used as the downpayment for the family home. Over the course of time, the downpayment will lose it's flavour as a personal asset and become a family asset. On the other hand, if the inheritance were simply stuck in a bank account somewhere and left untouched, it would, in all likelihood, retain it's character as a personal asset. As has already been said, the Family Relations Act sets out a presumption that family assets ought to be shared equally. There are, however, ways of rebutting this presumption. Section 65(1) sets out a shopping list of reasons why an equal division might not be appropriate: If the provisions for division of property between spouses under section 56, Part 6 or their marriage agreement, as the case may be, would be unfair having regard to (a) the duration of the marriage,(b) the duration of the period during which the spouses have lived separate and apart,(c) the date when property was acquired or disposed of,(d) the extent to which property was acquired by one spouse through inheritance or gift,(e) the needs of each spouse to become or remain economically independent and self sufficient, or(f) any other circumstances relating to the acquisition, preservation, maintenance, improvement or use of property or the capacity or liabilities of a spouse, the Supreme Court, on application, may order that the property covered by section 56, Part 6 or the marriage agreement, as the case may be, be divided into shares fixed by the court. The easiest way to explain the essence of this section is too look at the example of the 78 year old millionaire who marries a 24 year old fresh out of modelling school. When their relationship tanks in a couple of years, the 24 year old says "I'd like half of your millions, please." The 78 year old says "Hah! Our relationship was short, I brought everything into the marriage, and you didn't do a thing to contribute to the acquisition, maintenance and preservation of my millions." The 24 year old will get something but it won't be half. The relationship was short and the 24 year old brought nothing into the marriage and likely didn't help much with the things the 78 year old had before the marriage. Unmarried Couples: Trust Law This segment offers a brief review of property issues and must be read together with the chapters "Unmarried Couples > Common-Law Couples" and "Family Assets > Dividing Assets" for a proper understanding of the basics of the applicable law on this topic. Where a couple jointly own an asset, they are presumed to each have an interest in that asset. The asset will usually be divided equally, but it might be divided unequally if one of the parties contributed more to the asset than then other. "Contribution to the asset" can mean more than just sharing in the purchase price. It can also mean effort or money spent doing things like repairing or maintaining the asset, renovating the house or making more of the mortgage payments. Where only one member of a couple owns an asset and the other party wants a share of it, things get a bit more complicated. Essentially, the non-owning party must prove that the other party holds or should be deemed to hold some or all of that asset "in trust" for the non-owning party. Where a trust relationship like that is proven, the owning party will usually have to make a payment to the non-owning party to discharge the non-owner's interest in the asset. An "express trust" is a trust created by some action taken by the parties to establish the trust relationship, such as writing a contract or agreement saying "I will be the owner of this car, since your credit rating won't let you get a car loan, but the car is really yours." A "resulting trust" arises where the conduct of the parties shows an intention to establish a trust relationship. Where an express or a resulting trust can't be proven, the non-owning party must prove that owning party was "unjustly enriched" and then ask the court to impose a constructive trust on that asset in order to get a share of its value. This is the most common type of trust claim made by unmarried couples. The idea here is that the court should impose a trust — "construct" a trust — if the trust claim is proven. To establish a constructive trust, the non-owning party must show that:
Think of it like this. A couple have a very traditional, domestic relationship: Partner A goes off and shills bank loans, bringing home the bacon, while Partner B stays home, maintains the household and cooks and cleans. 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 working as a launderer, cook or housekeeper. Parter A benefitted from exactly the thing that Partner B was deprived of, and Partner A was "unjustly enriched" at Partner B's loss. 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 Parter A and Partner B and say to Partner B: "Ah, but you didn't pay any rent during your relationship, did you? You got free room and board in exchange for your chores, and we'll chop the value of that from your interest in Partner A's condo." You should not get the impression that all claims in constructive trust are doomed to fail, but you must be aware that they're generally not nearly as fruitful as claims under the Family Relations Act. If you love your partner dearly, but love her Salt Spring B&B even more, get married. Back to the top of this chapter. Site Navigation
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