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Legal Issues

General information.
Property division if you are married.

Common law couples - property division

General Information
Property Division rules apply differently to couples who are married, and couples who are living common law. If you are splitting up with your spouse/partner, you each have rights to certain property, and obligations to your former spouse/partner to share certain property. Many people are often unaware of these legal rights and obligations simply because we generally don't organize our personal lives in a manner to achieve specific legal consequences.
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Property division if you are married.
If you are married, most provincial statutes (which govern the division of property for married couples) presume that each spouse is entitled to a one-half interest in all family assets. This doesn't mean that each spouse will get have of everything. Not every asset is a "family asset", and not every division of property is an equal division. How property division will take place depends on your individual circumstances.
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What is a family asset?
A family asset is generally considered to be property owned by one or both spouses, or a minor child of either spouse, which is used for (or intended to be used for) a family purpose. In addition to what you might think of as obvious family assets, there are other not so obvious properties, which a court may conclude are family assets. Some examples of such property are:

  • Real estate holdings.
  • Shares in a corporation.
  • An ownership interest in a trust.
  • Property, which a spouse has a power of appointment over, which is exercisable in favor of himself or herself.
  • Financial assets, such as money in an account, bonds, etc. which are held or used for a family purpose.
  • An annuity, pension, home ownership or retirement savings plan.
  • Any other property which, when considered by the court, is found to be a family asset.

The bottom-line is that you want to determine what family assets you have, and what value they have. It is those family assets, which are subject to the one half interest (division) presumption.
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Challenging the one half interest presumption.
The presumption that each spouse is entitled to a one half interest, can be challenged. The court may take into accounts several factors in determining whether there should be a one half interest, or some other apportionment (either greater or lesser) of property, including:

  • The duration of the marriage,
  • How long the spouses have lived separate and apart.
  • The date that the property was either purchased or disposed of.
  • Was the property acquired as part of an inheritance or as a gift?
  • The needs of each spouse to become or remain economically independent and self sufficient, and
  • Any other circumstances relating to the purchase, maintenance, improvement or use of the property or the capacities or liabilities of a spouse.

In other words, the court will examine all of your individual circumstances to determine whether or not the presumption of crating a one half interest in the property should apply or not.
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Family assets may be reapportioned.
Family assets are most commonly reapportioned (i.e. the presumption does not apply) when:

  • The marriage was of a short duration, and one of the spouses brought the majority of the assets into the relationship.
  • One of the spouses was responsible for racking up a lot of debts, which were not related to the family.
  • Some assets are located outside of the jurisdiction.
  • One of the spouses requires more than half of the family assets to become independent; and
  • One of the spouses has wrongfully disposed of family assets.

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The bottom-line if you are married.
An experienced family law lawyer can help you sort through what is likely to be considered a family asset (and subject to the one half interest presumption), and what assets are likely to be reapportioned. An objective point of view, coupled with legal training, can assist you in coming to a fair and equitable division of property with your spouse.
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Common law couples - property division
Unmarried cohabitants have similar needs to their married counterparts when a relationship comes to an end.

Although there have been significant changes in applicable laws which have extended many of the rights and obligations of married couples to common-law couples, there are still very significant differences.

If you are in a common-law relationship, you must be aware of the following:
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The one half interest presumption does not apply
Unlike marriage, there is no presumption that assets should be divided equally at the end of a common-law relationship. There are, however, methods by which married rules regarding division of property may apply to common law couples.

  • Some jurisdictions use a temporal test, (I.e. after so many years of cohabitation, the married rules apply).
  • Alternatively, couples may enter into a written agreement (a domestic contract) about how they will manage or divide their assets.

In cases where married rules do not apply, common-law asset division is based on the law of trusts to establish their claim. The spouse/partner who does not have legal ownership of the property (i.e. their name is not on the title or ownership documents) must prove they deserve a share of the property.
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An example of how the law of trusts works
The principle common law trust remedy, which allows one common-law partner to share in assets owned by the other, is the doctrine of the "constructive trust."

The essential requirements of this doctrine are that:

  • One party has gained an unfair benefit.
  • The other party has been deprived in some way related to the unfair benefit; and,
  • There is no legal reason why the first party gained the benefit.

Take, for example, a couple that has a very traditional, domestic relationship. Partner A works while partner B stays home and maintains the household. Partner B does the cooking and the cleaning. 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 them. Partner A benefited from Partner B's services, and Partner B was deprived of the payments he/she would have received for his/her services on the open market. Partner B argues that he/she should be able to share in Partner A's property.

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 the above circumstances and Partner B and say: "You didn't pay any rent during your relationship with your partner. You got free room and board in exchange for your chores. We are going to take that value (free room and board) from your interest in Partner A's assets."
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How long does it take to establish my interest in property?
There is no set length of relationship that must be met in order to make a successful claim under this doctrine. In general, the longer the relationship is, the more likely your claim will be to succeed. In most jurisdictions, this doctrine applies to both opposite sex and same-sex couples.
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The bottom-line if you live common law.
Because the one half interest presumption does not apply, it can be much more complex when determining how property should be apportioned between common law couples. If you are contemplating entering into a common law relationship, or even if you are already in one, it is a good idea to consider entering into a domestic contract.

If you have been in a common law relationship that is ending, a family law lawyer can review the circumstances of your relationship with you, and help you determine what a fair apportionment of property should be, and help you get it.
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