Exempt Property in Alberta: Key Considerations in Family Law

In Alberta, the Family Property Act governs the division of property upon the breakdown of a relationship, whether the couple was married or were in an Adult Interdependent Relationship. This Family Property Act replaced the previous Matrimonial Property Act and expanded the presumption of equal division to include property acquired by partners in unmarried relationships. However, certain categories of property are exempt from division, meaning they are not shared between partners when the relationship ends.

Categories of Exempt Property

Section 7(2) of the Family Property Act identifies five main categories of property that are typically exempt from division:

1. Property Acquired by Gift from a Third Party;

2. Property Acquired by Inheritance;

3. Property Acquired Before the Marriage or Relationship;

4. Award or Settlements for Damages Related to Tort Claims; and

5. Proceeds from Life Insurance Policies.

Important Considerations

Several key factors can impact whether the property remains exempt:

• Growth in Value: Any increase in the value of exempt property is considered divisible family property. For example, if a spouse owned a house before the relationship and its value increased during the relationship, the increase in value is typically shared.

• Loss of Exemption Through Mixing: If exempt property is mixed with non-exempt property, the exemption can be diminished or lost. For example, using an inheritance to pay off a joint mortgage can make it difficult to trace the exempt portion.

• Adding a Spouse to the Title: If one spouse adds the other’s name to the title of an exempt asset, such as a house or investment account, the property may no longer be considered exempt.

• Burden of Proof: The spouse claiming the exemption must provide evidence to prove the property is exempt.

Protecting Exempt Property

The most effective way to protect exempt property is through a cohabitation, prenuptial, or postnuptial agreement. Sections 37 and 38 of the Family Property Act allow couples to specify:

• Which property will remain exempt upon separation or divorce;

• How the growth in the value of exempt property will be treated; and

• The division of property acquired during the relationship.

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Final Thoughts

Navigating property exemptions in Alberta can be complex, particularly in long-term relationships where assets are often intermingled. If you want to protect your property or need assistance with property division, consult with our family lawyers at Stokes Law Family. We can help you understand your rights, draft agreements to safeguard exemptions, and provide guidance on maintaining the traceability of exempt assets.

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