734 7 Ave SW #1610, Calgary, AB T2P 3P8
Calgary law service process options.

What Assets Are Excluded from Property Distribution in Alberta?


Are there types of property that I do not have to share with my spouse upon relationship breakdown?

Under Alberta’s Family Property Act, the fruit of the marriage, or assets and debts acquired during the period of cohabitation, are divisible equally between yourself and your spouse.  It does not matter whether those assets or accounts are in joint names or not.  There are four types of assets that may be exempt, however, that you do not have to split with your partner/spouse.

The most common exemption is assets you owned prior to the relationship.  The Act says the value of that asset as at the date you began cohabiting (or got married if you did not cohabit prior), whichever is earliest, is exempt.   That asset must be in existence or traceable into an existing asset.  Depending on how you handle that asset, the entirety of the original value may be exempt from distribution.  Rolling those funds into an asset in joint names may cause you to lose up to 50% of the pre-relationship value.

The increase in value of an exempt asset is divided “as is just and equitable”.   This is a very tricky area as the increase in value could be shared with your ex-partner anywhere between 0 to 50% – it depends.

An inheritance you receive during the relationship may be exempt. Again, it needs to be traceable into an existing asset and some portion of it may lose its exempt status, depending on what you do with the inheritance.     Any increase in value on this otherwise exempt asset is also arguable.

A gift you received from a third party that was intended for one partner alone is another category of an exempt asset. This most commonly occurs where a third party is estate planning and chooses to give a gift to a family member (one of the partners) in advance of their passing.   The same conditions/argument referenced above apply to this type of exempt asset.

Lastly, damages you receive for your personal pain and suffering derived from a tortious act, such as being in a motor vehicle accident where the other driver is at fault. Sometimes one receives a settlement in this type of scenario that also includes a payout to your partner and other family members impacted by your injury. As a result, determining which part of the settlement funds you receive that is solely attributable to one’s personal injuries is crucial and tricky. As above, these funds still need to be in existence or traceable into a current asset, the exempt amount can be reduced if it is transferred into joint names, and any increase in value may be shareable to some extent.

Getting legal advice early on as to what assets or portions of assets are exempt is crucial.   A prenuptial agreement or cohabitation agreement that specifically addresses these types of assets, can significantly reduce complications upon relationship breakdown.

More articles