Property Issues

1. Property Issues In partnership with the Edmonton Public Library

2. Agenda • Introductions • How this evening’s presentation will proceed • Housekeeping – washroom locations • You have three things in front of you: • A copy of this PowerPoint • Distribution example sheet • A resource sheet • A feedback form that we ask that you fill out before you leave tonight to help us improve these sessions Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

3. Disclaimer The information presented during this session may have limited application to your particular situation.  The lawyers who are here this evening CAN provide legal information that may give you a greater understanding of how the law might apply to your own situation.  The lawyers who are here this evening CAN NOT provide you with individual legal advice. Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

4. Legal Assistance • Legal Aid – (780) 427-7575 • Student Legal Services – (780) 492-8244 • Law students • Simple support/valuation applications; Substituted service orders; Uncontested divorces • Duty Counsel • Provincial Court – Courtroom 441 • Court of Queen’s Bench – Courtroom 314 and 612 • Limited scope retainer • Pro bono legal services • ECLC – Summary legal advice Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

5. Contents • Resolving Issues Out of Court • General Information • Jurisdiction • Process • Disclosure • Valuing Assets • How does the Matrimonial Property Act work? • How Property Gets Divided Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

6. Contents • Reaching an Agreement • Common Law Couples • Miscellaneous • Starting an action • Death of spouse • Exclusive Possession Order • Prenuptial and cohabitation agreements • Example Problems Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

7. A. Resolving Parenting Issues Out of Court Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

8. B. General • If married  Matrimonial Property Act applies. • If not married and failing agreement  court discretion. Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

9. C. Jurisdiction • Can start action in Alberta if: • divorce action started in Alberta, • both parties live in Alberta, or • the last joint residence was in Alberta. Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

10. D. Process • DVD Disclosure, Valuation, Division Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

11. I. Disclosure • Both sides must provide all information about their property and debts. Property statement required under Matrimonial Property Act where action started. • Information must include everything, wherever it is located. Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

12. I. Disclosure • There are a number of methods to get this information from the other side • Requesting it • Notice to Disclose • Questioning • Consider: • Date to value property • Extra information needed for valuation process Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

13. II. Valuing Assets • Alberta law requires that assets are valued at “date of trial” • Parties can agree on a date • Date used affects disclosure of information Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

14. II. Valuing Assets • Examples of Assets and Methods of Valuation • Real Estate (e.g. home) valued by • Appraisal (AACI or CRA) • Realtor’s market evaluation • By agreement • Property tax assessment Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

15. II. Valuing Assets • RRSPs • Statements usually sufficient • Tax discount or equalize by transfer • Pensions • Defined benefit plan (needs valuation) vs. defined contribution plan (statement usually sufficient) • Best to get pension details and recent statements Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

16. II. Valuing Assets • Pensions (continued) • Entitled to division – options depend on type of pension, ages of parties, and whether or not pension is “in pay” • Valuation options • Request value from administrator (government/private – also confirm division options from administrator) • Hire accountant or actuary • Consider taxes Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

17. II. Valuing Assets • Businesses/Farms • Can be complicated • A lot of information is usually required • Formal valuation  range of types/costs • Issues often related to income Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

18. II. Valuing Assets • Personal property • “Market value”, not replacement cost • Can pay to have it valued • Best to divide in kind or agree on value • Internet sites are a good resource (Kijiji, Autotrader, etc.) • Offense to dispose of household goods after action started under the Matrimonial Property Act Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

19. III. How does the Matrimonial Property Act work? • 3 types of property • Property acquired during marriage • equal division (subject to (b) and (c)) • Rare to depart from equal division Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

20. III. How does the Matrimonial Property Act work? • Exempt property – not shared (must “trace”) • Gifts from third parties • Inheritance • Acquired before marriage • Tort awards • Proceeds of insurance policy Value when acquired (on date of marriage) is exempt from division Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

21. III. How does the Matrimonial Property Act work? • s. 7(3) property – “just and equitable” division Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

22. III. How does the Matrimonial Property Act work? • Section 8 factors apply to all 3 types of property, but must be considered for s. 7(3) property – s. 8 factors include: • Contributions made by spouses • Length of marriage • Circumstances of parties at date of marriage and date of trial • Oral or written agreement between parties • Property acquired while parties were separated • Gifts or transfers to third parties (not bona fide) Read s. 8 of Matrimonial Property Act for more particulars Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

23. IV. How property gets divided • Real property options for division • One party buys out the other • Property sold • Capital property “rollovers” Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

24. IV. How property gets divided • Pension options for division • One party buys out interest of other directly or in overall division • May be able to divide at source Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

25. IV. How property gets divided • RRSP options for division • Split between parties (roll-over) • Using value (subtract tax) and one party buys out other directly or in overall division Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

26. IV. How property gets divided • Business interest options for division • Can be complex • Usually need an accountant or tax advice Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

27. IV. How property gets divided • CPP options for division • Credits earned during marriage can be split • Must apply Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

28. IV. How property gets divided • Debt options for division • Debts are part of matrimonial property • Third party not affected by agreement of spouses • In some circumstances, debts after separation may also be considered Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

29. IV. How property gets divided • Unusual assets – Get advice in dealing with: • Stock options • Severance pay • Trust property • Life insurance Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

30. IV. How property gets divided • Use of experts: • Check qualifications • Parties may agree on one expert and share costs • If going to court, statement of expert witness required Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

31. IV. How property gets divided • Tax Issues: • Capital gains • RRSPs/Pensions • Corporate tax issues – important to consider if 2 levels of tax • For some tax issues – difference between married and common law Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

32. E. Reaching an Agreement • Independent legal advice requirement • Agreement should be in writing with proper certificates Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

33. F. What rules apply to common law couples? • Matrimonial Property Act does not apply • Common law couples have some rights but they are more complicated – no defined period of time for rights to be acquired Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

34. F. What rules apply to common law couples? • No presumption of equal property division • Many factors to consider, including financial and non-financial contributions of both parties, and benefits received by both parties • Best claims are long-term relationships and relationships with children Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

35. G. Miscellaneous • Starting an action • Death of spouse • Exclusive Possession Order • Prenuptial and cohabitation agreements Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

36. I. Starting an action • If married • Statement of Claim for Divorce and Division of Matrimonial Property  Form FL-3 • Statement of Claim for Division of Matrimonial Property  Form FL-2 • If common law • Statement of Claim – no form in rules • BUT if common law prior to marriage, may add claim in Form FL-2 and FL-3 Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

37. II. Death of spouse • May start action if could have prior to death • 6 months from grant of probate to start • If action started prior to death, estate can continue Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

38. III. Exclusive Possession Order • If married  Matrimonial Property Act Part II • If common law  Family Law Act applies if spousal support order • Similar to Restraining Order for home only Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

39. IV. Prenuptial and Cohabitation Agreements • Can agree on property division if marriage/relationship breaks down • For married spouses, waive rights under Matrimonial Property Act • Independent legal advice required Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

40. H. Example Problems • John Doe and Jane Doe have been married for 10 years. At marriage breakdown, they have a home worth $350,000 with a mortgage of $275,000. Jane has a pension with the Alberta Government. Her contributions to that pension are $36,000. Jane has a vehicle worth $2000 and John has a vehicle worth $5000. They also have furniture, art, and electronics. Jane has $2000 of credit card debt… Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

41. …John wishes to keep the Matrimonial Home, Jane wants to keep her pension, they each want to keep their own vehicles, and they want to divide the furniture, art, and electronics evenly between them.

42. H. Example Problems • Same fact set as in #1, with additional scenarios: • When the house was purchased, Jane used her $150,000 savings accumulated prior to marriage for the down payment. • The house was put in both names when purchased. Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

43. H. Example Problems • Same fact set as in #1, with additional scenario: During marriage, John inherited an acre of land on Vancouver Island. It was worth $50,000 when he received it and $125,000 at marriage breakdown. Except for paying the annual property tax of $1000, the parties made no contributions to this property during the marriage. Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

44. H. Example Problems • Same fact set as in #1, with additional detail: The marriage broke down because Jane had an affair with a co-worker. Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

45. H. Example Problems • Same fact set as in #1, with additional scenarios: • A month after the parties separated and before any proceedings were started, John died in a car accident. • Jane learned that John has done a new will, leaving the house to his girlfriend. Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

46. Reminder Please fill out the feedback forms. Your input is essential in helping us to improve future sessions. Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous

47. Disclaimer The information presented during this session may have limited application to your particular situation.  The lawyers who are here this evening CAN provide legal information that may give you a greater understanding of how the law might apply to your own situation.  The lawyers who are here this evening CAN NOT provide you with individual legal advice. Process Common law couples Resolving Issues General Info Jurisdiction Reaching Agreement Miscellan-eous