By Mark Demas
When couples separate, questions about how to divide the home, savings, debt and other assets often take centre stage. Many Albertans search online for information about “equalization payments” — a term commonly used in Ontario. But Alberta uses a different model altogether, one grounded in the Family Property Act rather than an equalization-based system.
Understanding the distinction between Ontario’s equalization approach and Alberta’s division approach helps families navigate their rights and obligations with confidence. It also prevents confusion caused by national articles or advice that does not apply here.
This article explains what “equalization” means, why Alberta deliberately uses a different system, and how courts divide family property fairly when relationships end.
Why the Difference Matters
While the goal in every province is fairness, the method for achieving that fairness varies. Wrong assumptions can have real consequences. A spouse who reads about equalization may expect a lump-sum payout, even though Alberta law requires a different analysis. Likewise, someone may misunderstand which assets are exempt or how debts are treated.
In Alberta, property division is governed by the Family Property Act (FPA), which focuses on division of actual property, not balancing assets through a mathematical equalization payment.
Equalization: The Ontario Model (for context)
To appreciate how Alberta differs, it helps to understand the Ontario approach.
In Ontario, the Family Law Act uses a net family property model. Each spouse calculates:
- Assets at separation
- Minus debts at separation
- Minus assets brought into the marriage
- Adjusted for specific exclusions
The spouse with the higher net family property pays the other spouse an equalization payment to make things fair. Importantly:
- Assets are not co-owned.
- There is no automatic right to half of each asset.
- Equalization is a one-time payment to balance financial differences.
This model focuses on values, not ownership transfers.
Alberta’s Model: Division of Family Property
Alberta takes a more direct approach. Under the Family Property Act, the focus is on dividing actual property, not simply equalizing values.
In Alberta:
- Each asset is identified and valued
- Each debt is identified and valued
- The “family property” total is determined
- Then the court or the spouses divide the property (and debts) themselves
The guiding principle is an equal division of family property unless an unequal division would be fairer.
This means Alberta spouses may literally divide:
- The home
- Investments
- RRSPs
- Pensions
- Vehicles
- Business interests
- Debts (including mortgage, HELOC, loans and credit cards)
Rather than settling values through one large payout, Alberta often involves transfers or exchanges of property.
What Counts as “Family Property” in Alberta?
Family property generally includes anything acquired by either spouse during the relationship, regardless of whose name it is in.
Examples include:
- The matrimonial or family home
- RRSPs and TFSAs
- Pensions
- Bank accounts
- Stocks or investments
- Vehicles and recreational property
- Debts accumulated for family purposes
Even if only one spouse is on title or the mortgage, the asset (and its equity) is still considered family property.
What Property Is Exempt?
Some assets may be exempt from division:
- Property acquired before the relationship
- Gifts from third parties
- Inheritances
- Insurance proceeds
- Personal injury awards
However — and this is the most misunderstood part — the growth in value of exempt property during the relationship is not exempt. That growth is typically divided.
Example:
If one spouse owned a home before the relationship, only the pre-relationship value may be exempt. But the increase in equity during the relationship is shareable.
Why Alberta Rejects the Equalization Model
Alberta previously examined the Ontario model when updating its legislation. It chose instead to maintain a property division framework for several reasons:
- Transparency of actual ownership
Dividing actual assets provides clarity and reduces disputes about valuation methods. - Better alignment with Alberta family finances
Many Alberta families hold significant wealth in the family home, pensions or farm/business assets. These are easier to deal with through division than calculation-based equalization. - Flexibility
Alberta allows parties to structure settlement creatively through negotiation, mediation or collaborative law. - Fair treatment of exempt property
Equalization models often generate complexity in tracing exemptions. Alberta’s model allows courts to track and divide property more directly.
How Alberta Courts Divide Property
Courts follow a structured approach:
Step 1: Identify property and debt
All assets and liabilities are listed, including:
- Home and mortgage
- RRSPs and pensions
- Bank accounts
- Business interests
- HELOCs and loans
- Credit card balances
Full financial disclosure is required.
For more: Courts demand full financial disclosure in family law cases.
Step 2: Determine which items are exempt
This involves tracing pre-relationship assets and other exempt categories.
Step 3: Value the property
Valuation dates may vary depending on the type of asset. Appraisals, actuarial valuations and statements often play a role.
Step 4: Divide the property (and debts)
The default is 50/50, but the court may order an unequal division if fairness requires it. Reasons for unequal division may include:
- Significant financial misconduct
- Reckless dissipation of assets
- Very short relationships
- Undue hardship
- A large imbalance in exempt property
Unequal division is the exception, not the rule.
Alberta’s Approach in Practice: Examples
Example 1: The Family Home
The court may order:
- One spouse to buy out the other, or
- Sale of the home and division of equity
See: What happens to the mortgage after separation in Alberta?
Example 2: Pensions and RRSPs
Alberta divides the actual value of pensions and RRSPs accumulated during the relationship — often requiring actuarial valuation.
See: Pensions, RRSPs and property division in Alberta divorces.
Example 3: Business Assets
Businesses acquired or grown during the relationship are divisible. Complex cases may require expert valuations.
Example 4: Debt
Debt is also family property when incurred during the relationship, even if in one spouse’s name.
See: Dividing debts during a divorce: What Alberta law says.
Why Confusion Happens: National Articles and Online Calculators
Much of the information online speaks to Ontario’s equalization model. People in Alberta frequently misinterpret those resources and assume:
- They are entitled to a lump-sum equalization payment, or
- They must pay one
This often leads to unnecessary panic or unrealistic expectations. Alberta uses a division-based model — not a compensation-based equalization system.
Can Alberta Couples Use Equalization by Agreement?
Yes — couples can contract into an equalization-like structure through:
- A separation agreement
- Mediation
- Collaborative law
But courts default to the Family Property Act unless both parties knowingly agree otherwise with independent legal advice.
For more: What is a separation agreement and why should you have one?
How Long Do You Have to Divide Property?
Generally, spouses have:
- 2 years after divorce to bring a claim, or
- 2 years after separation for unmarried partners (AIPs)
There are nuances, so legal advice is crucial.
Why Legal Advice Matters
Property division can shape your financial future for decades. Whether you keep the home, share a pension or divide business assets, the choices made during separation matter.
A family lawyer can help with:
- Identifying and valuing property
- Determining exemptions
- Negotiating buyouts or transfers
- Structuring creative settlements
- Protecting long-term financial stability
- Drafting separation agreements
- Representing you in court if needed
Getting advice early reduces uncertainty and conflict.
How Demas Schaefer Family Lawyers Can Help
At Demas Schaefer Family Lawyers, we help Albertans navigate the complexities of property division with clarity and confidence. Whether you are dealing with a family home, retirement assets, a small business or significant exempt property, our team works toward fair and practical solutions that reflect Alberta law.
We assist with:
- Property identification and valuation
- Pensions, RRSPs and exempt property
- Mortgage and refinancing issues
- Separation agreements
- Mediation and collaborative processes
- Litigation when necessary
We offer a free 15-minute telephone or video consultation to discuss your situation and outline your next steps.
Contact us today for tailored guidance you can rely on.