When married spouses are unable to divide their assets by agreement, courts must determine which assets will be divided and how. Then, the Court can determine whether the assets should be divided equally or not. For unmarried couples, one party must establish that he/she has a claim to assets owned by the other before a court can decide how those assets should be shared.
Married couples are presumed to each have a half interest in all “family assets”. Section 58(2) of the Family Relations Act defines “family assets” as “property owned by one or both spouses and ordinarily used…for a family purpose”. Other assets may be exempt from division, although it is up to the party seeking to exempt an asset from division to prove that the asset is not a “family asset”.
Upon the breakdown of a marriage, all family assets are presumed to be shared by the parties jointly. Before the family assets can be divided, however, a “triggering event” must occur, in order to determine the date upon which the family assets are to be valued. The Family Relations Act sets out the four possible “triggering events” at section 56(1):
- the parties execute a separation agreement;
- the court declares that the spouses have no reasonable prospect of reconciliation;
- the parties are divorced; and
- the court declares the parties’ marriage to be null and void.
Assets acquired after the triggering event are likely to avoid division.
Our legislation presumes that each spouse is entitled to half the value of all family assets upon marriage break down. This presumption, however, may be rebutted. Under section 65 of the Family Relations Act, in certain circumstances, a spouse may apply for a “reapportionment” of family assets. The court is empowered to divide the assets 60/40, 70/30 or by some other method that’s fair in all the circumstances.
Judges will consider a number of factors in these instances, including the length of the marriage, the needs of each spouse to become economically self-sufficient and the capacity of a spouse. Gifts and inheritances may be relevant. In cases where the marriage is short, and one of the spouses was responsible for bringing in the bulk of the assets into the relationship, reapportionment is likely. Other situations where reapportionment might arise, occurs when:
- one of the parties requires more than half of the family assets to become financially independent;
- one spouse has higher child care costs than the other; or
- one of the spouses was responsible for wrongfully disposing of family assets.
Unmarried couples can also share in each other’s assets, but only under the law of trusts. The partner who seeks this “equitable” relief bases his claim on the premise that the other party holds property interest “in trust”.
The trust remedy most often used is that of “unjust enrichment”. This is proven when the non-owning spouse proves that he/she has suffered a deprivation, and the owning party has been enriched.
An example of this relationship:
Quinn and Drew are an unmarried couple living together. Quinn owns the family home and is responsible for earning an income. Drew is not on title to the residence, but maintains the home. Quinn, in this example, receives the benefit of Drew’s domestic services. Quinn is saved the expense of hiring a housekeeper. Drew is deprived of earning income for the very services provided. When the couple separates, Drew may be entitled to a share in Quinn’s assets under the law of trusts.
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