While the world seems to have been turned on its head these
last few months as we all adjust to the “new normal” necessitated by the
worldwide COVID-19 pandemic, there have been some non-Coronavirus related
changes made to the way property division for non-married couples is legislated
in Alberta that are worth noting.
Legislative Changes
The legislative framework for the way in which property
division occurs upon the breakdown of a relationship for non-married couples in
Alberta has changed drastically. In December 2018, royal assent was granted in
the provincial legislature to Bill 28, the Family
Statutes Amendment Act¸ 2018, SA 2018, c 18 (“FSAA”). This Act set out significant amendments to Alberta’s Matrimonial Property Act, the act that governed
property division of married couples upon breakdown of the marriage. As of
January 1, 2020, the FSAA renamed the Matrimonial
Property Act to the Family Property
Act (“FPA”). The name change is
significant as it signals a broader application of the legislation to not only
the property division of married couples, but to non-married, adult
interdependent partners as well. The FPA now provides for adult interdependent
partners to make a claim for property division within 2 years from the date the
party applying knew or ought to have known the relationship had ended. The
implications for this legislative change are potentially quite far-reaching, as
more and more couples either remain in adult interdependent relationships
without getting married or live together for a significant period of time
before getting legally married.
Furthermore, the FPA may prove to create more confusion than
clarity, as it applies not only to property division for adult interdependent
relationships, but also for married spouses, including any time they lived
together in a relationship of interdependence before they were married.
Determining the exact date of cohabitation for adult interdependent
relationships, or married couples for the relevant cohabitation period before
marriage, for the purposes of division of property will likely prove to be a
difficult and nebulous exercise in many cases.
Defining Adult Interdependent Relationships
Part of the impetus behind the amendments to the FPA was to
help those in committed relationships outside of traditional marriage to divide
their property. The amendments now provide adult interdependent partners (“AIPs”) with the same property division
rights and rules as married couples.
An AIP is defined in Alberta’s Adult Interdependent Relationships Act, SA 2002, c A-4.5 (“AIRA”) as two individuals who live
together in a relationship of interdependence:
- for a continuous period of at least 3 years;
- of some permanence (and less than 3 years) if the couple has a child together, or
- who have entered into an adult interdependent partner agreement.
While many use the colloquial term “common law” interchangeably
with AIPs, the two terms do not bear the same legal meaning and implications.
The AIRA specifically uses the terms “adult interdependent partner” or “adult
interdependent relationship” to describe a non-married couple who are in a
relationship with the above attributes. Common law is a not a term legally
employed in Alberta, and furthermore, can actually have an entirely different
legal meaning than AIPs. For instance, in the federal Income Tax Act, if two people live together for a period of 1
year (as opposed to 3 years under the AIRA), they are considered common law
partners for income tax purposes
The AIRA sets out the following factors to consider when
determining whether two people function as an “economic and domestic unit” such
that they can be considered AIPs. These factors include:
- the exclusivity of the relationship;
- how they behave when it comes to household activities and living arrangements;
- how they represent themselves to others as an economic and domestic unit;
- the contributions they make to each other or their mutual well-being;
- the degree of financial dependence or interdependence between them;
- the care and support of children, if any; and
- the ownership and use of property.
AIPs can still dictate the terms of their own property
division to be different from the default property division rules set out in
the FPA by entering into a Cohabitation Agreement, which sets out the
cohabiting parties’ obligations to each other, such as their roles in the
relationship, any child support or child custody issues, property division,
mortgage or rent payments, and life insurance policy designations.
Unlike a marriage, there are no formal proceedings akin to a
divorce that terminate an adult interdependent relationship. Instead, the
relationship ends upon the occurrence of any one of the following:
- The partners live separate and apart for one year;
- The partners marry each other, or one of the partners marries or enters into an adult interdependent relationship with a third party;
- The partners sign a written agreement stating that they intend to live separate and apart without the possibility of reconciliation.
For all intents and purposes, the changes to the FPA have
made AIPs and married couples effectively the same with respect to property
rights and protections upon dissolution of the relationship. The only property
right that remains solely available to married couples are dower rights, which protect
the spouse of a registered owner of real property. These amendments to the FPA
therefore necessitate serious consideration about your rights upon breakdown of
an adult interdependent relationship, as it will now effectively be treated the
same as a divorce in terms of division of property.
Estate Planning Considerations
The significance of a couple being recognized as AIPs is the
rights, benefits and responsibilities that arise from a legal perspective.
Those rights, benefits and responsibilities are now nearly indistinguishable
from those of married couples. It is therefore important to appreciate your
rights, and conversely your partner’s rights, upon breakdown of an adult
interdependent relationship. This is critical not only during one’s lifetime,
but also an important consideration in estate planning.
Increasingly, individuals enter into successive adult
interdependent relationships and/or marriages. It is important to appreciate
with the amendments to the FPA the heightened rights and protections an AIP
has, and what they may be entitled to when you die, or alternatively, what you
may be entitled to as the AIP of a person who has deceased.
A surviving AIP is a “family member” of the deceased for the
purposes of family maintenance and support claims under the Wills and Succession Act, SA 2010, c
W-12.2, meaning that a surviving partner
can apply for maintenance and support from the estate if the deceased does not
make adequate provisions for them in the Will or on intestacy. If you leave a
surviving AIP inadequately provided for, this can have serious consequences for
other individuals, such as children or other partners, whom you intend to
provide for in your Will.
Surviving AIPs are afforded a whole host of other rights and
protections akin to married spouses upon death of the other partner in the
adult interdependent relationship. For instance, the AIRA has amended the Insurance Act to allow for a person to
insure the life of an AIP. There are also rules which allow for an AIP to
receive certain insurance benefits under the law. The law for Assured Incomes for
Severely Handicapped (“AISH”) now provides benefits to the
co-habituating partner of an AISH-eligible person, which includes AIPs. There
are also benefits to AIPs under the Workers
Compensation Act where payments available to the victim, in the event of death,
can be payable to the victim’s AIP. These other benefits afforded by the
above-noted legislation are independent of the FPA and many were in place
before the FPA came into being.
If you have questions about how these legislative changes
might affect you and your estate planning, please contact one of the members of
our Estates, Trusts, and Tax practice group.