By Emily Gore
Divorce can be a difficult process for many couples. On top of the emotional strain it brings, there has to be a division of property and one partner often must provide spousal support for the other. These issues are rarely straightforward and may involve protracted discussions between spouses and their lawyers, mediation or even litigation.
The team at Demas Schaefer helps clients fully understand these issues while ensuring they are treated fairly and receive what they deserve.
The division of property
Matrimonial property is subject to division between the spouses in the event of a divorce. The Family Property Act (formerly known as the Matrimonial Property Act) calls for matrimonial property to be distributed equitably between spouses and adult interdependent partners (the legal term in Alberta for common law couples). However, that does not mean that property is divided 50/50 as that may not be fair to one party.
According to the Act, family property includes property owned by the spouses, whether jointly or independent of the other. That means that all real estate is family property, such as a house, a self-contained dwelling unit, part of business premises with living arrangements, mobile homes, condominiums or suites.
Family property also includes “household goods.” This encompasses personal property owned by either spouse or ordinarily used or enjoyed by either spouse or other family members, for uses such as transportation, household, educational, recreational, social or esthetic purposes.
Family property also includes pensions, investments, bank accounts and other items that will be subject to division.
What property is excluded from division?
Some assets may be protected from division upon divorce or separation (called “exempt property”). Examples include:
- property that was owned prior to the relationship;
- an inheritance;
- a gift from a third party to one spouse exclusively;
- settlement funds from a lawsuit; and
- insurance proceeds that do not relate to the replacement of property.
However, exempt property could be lost depending on how the asset was treated during the marriage. For example, if a husband received an inheritance from his parents but deposited the money into a joint bank account used by both parties, the husband’s exempt property value could be reduced. Similarly, if an exempt property is disposed of and no longer exists, the exemption will be lost.
Determining spousal support
Spousal support may be ordered by the court if the parties are applying for a divorce, or even after they are divorced. in the case of married spouses the court can apply the spousal support provisions found in the Divorce Act or the Family Law Act, depending on whether a divorce action was commenced or proceedings have been commenced under the Family Law Act.
Partner support can be ordered if a couple is ending an Adult Interdependent Relationship (AIR). Partner support is essentially the same as spousal support, but for unmarried couples who are found to be in an AIR. In these cases, the adult interdependent partner support provisions found in the Family Law Act will apply.
Alberta defines an AIR as a relationship of interdependence with another adult:
- that has lasted at least three years; or
- for less than three years if you have signed an Adult Interdependent Partnership agreement; or
- for less than three years if the two of you have a child together.
A relationship of interdependence is defined in the Adult Interdependent Relationships Act as a relationship outside marriage in which any two persons:
- share one another’s lives,
- are emotionally committed to one another; and
- function as an economic and domestic unit.
Partner support is not available to parties if they have not reached the threshold of being in an AIR.
In summary, the spousal support provisions in the Divorce Act can be used only for married spouses, while similar provisions in the Family Law Act can be used for married couples or those in an AIR. At Demas Schaefer Family Lawyers we will carefully explain the difference to you and advise which piece of legislation is most appropriate for your circumstance.
In both cases, the objectives of a spousal/partner support order are to:
- recognize any economic advantages or disadvantages to the spouses/partners;
- divide up any financial consequences arising from the care of the children over and above the child support;
- lessen any financial hardship on the spouses that may have taken place because of the end of the marriage; and
- encourage the spouses to be able to support themselves within a reasonable time.
Both statutes make it clear that the misconduct of either party is not to be considered when deciding whether to grant spousal/partner support and the amount to be paid. That is because a spousal/partner support order is not intended to punish a spouse for bad behaviour or to reward the other for good behaviour.
Factors considered with spousal support
When the court is drawing up a spousal support order, the Divorce Act directs it must consider the financial situation, needs and related circumstances of each spouse. That includes:
- how long they lived together;
- the functions performed by each spouse during the time they lived together; and
- any order, agreement or arrangement relating to support of either spouse.
Alberta’s Family Law Act also includes these factors and adds that courts must also consider:
- whether either of the spouses/partners has a legal obligation to support another person, such as another spouse or children; and
- if the paying spouse/partner lives with someone else, how much that person contributes to their household expenses, and how that may increase their ability to pay support while decreasing their financial need.
The first thing for a judge to determine is if the person asking for spousal support is entitled to spousal support. If not, that is the end of the matter. Entitlement can be established in the following three ways:
- by way of a contract such as a pre-nup;
- to compensate a spouse for a disadvantage that spouse has suffered as a result of a role that spouse adopted during the relationship, such as leaving a career to be a stay at home parent; and
- if a spouse is unable to financially support themselves in a manner that affords them a lifestyle comparable to the marital standard, and if the other spouse has addition funds after covering the costs associated with living the marital standard (this is called non-compensatory or needs base support).
If the person is entitled to spousal support, then the court must decide the amount to be paid and the duration. That decision will be informed by the Spousal Support Advisory Guidelines.
If your ex-partner refuses to pay spousal support or is tardy in doing that, payees can enroll in Alberta’s Maintenance Enforcement Program (MEP). It enforces maintenance obligations awarded in court orders and certain agreements by collecting payments from payors and forwarding them to recipients.
Click here for more information on MEP.
Spousal Support Advisory Guidelines
The Department of Justice (DoJ) notes that the Spousal Support Advisory Guidelines were developed by family law professors and are not part of the body of law.
“However, judges often base their decisions about spousal support on the guidelines,” states the DoJ. “Many family lawyers also use the guideline when helping clients to make decisions and set up spousal support agreements out of court.”
The DoJ states that other key points about the guidelines include:
- They do not provide advice on whether a spouse is entitled to support.
- In many cases, judges will follow these guidelines but are not required to do so. “For that reason, it is important to talk to a lawyer to find out what amount of spousal support (if any) may be ordered in your case.”
- It may be a waste of your time and energy to calculate a spousal support amount if there is no legal requirement to pay it. “Your lawyer can advise you on this.”
- You may need software designed to calculate spousal support. For example, you will likely need to calculate some tax considerations. “Online calculators that may help with simple calculations, but not with the harder calculations.”
- Federal, provincial and territorial family laws sometimes overlap. “However, some provincial and territorial laws have unique features that these guidelines do not deal with.”
Exchanging income information
To determine a fair level of spousal support, both parties must provide proof of income. That would include:
- Copies of tax returns and notices of assessment for each of the three most recent taxation years.
- Copies of the three most recent pay stubs showing gross pay for the year to date, or other proof of current income.
- Copies of statements from employment insurance, social assistance, pension funds, workers' compensation, disability insurance or any other source of income showing the total income from that source for the current year.
- Financial statements from the business and/or corporate tax returns for those who are self-employed.
Spouses can ask their ex for income information by filing and serving a “Notice to Disclose” in the Court of King’s Bench or a “Request for Financial Information” in the Alberta Court of Justice.
If the other party does not provide adequate financial information, the judge may impute their income and/or award costs against them. “Imputing” income is a process whereby a judge may assign an income to an individual that is commensurate with their earning ability rather than using their income as reported to the Canada Revenue Agency.
Willfully providing false information, whether in an affidavit or in a court proceeding, is on offence under the Criminal Code carrying a maximum prison sentence of 14 years.
Married spouses can draft their own property division agreement if they want to divide property differently than the rules in the legislation. However, while such an agreement will be a legal document the court has the power to change it if a party later wishes to ask the court to do so. If you wish to make the property agreement not only legal but fully enforceable by a court in Alberta, the following contractual formalities must exist:
- The agreement must be in writing;
- It must be signed separately from the other person;
- Each party must obtain and receive their own legal advice independent from the other party from their own independent lawyer; and
- There must be an absence of duress.
It is only where these formalities are met that a court will be bound to enforce the terms of the agreement. Otherwise, it is open to the court to change the terms if a judge deems that appropriate.
At Demas Schaefer Family Lawyers, we will advise you on how to structure such an agreement to make it enforceable by the court.
Click here for more information on the importance of full financial disclosure.
Contact us for assistance
When a marriage or an adult interdependent partner relationship breaks down, it can be difficult to divide up property or determine what, if any, spousal/partner support is needed. The team at Demas Schaefer can help you navigate your way through this complex area of the law to ensure that you receive what you are legally entitled to. Contact us for a free consultation.