If you're
married... are you familiar with the rules that apply to your
matrimonial regime?
The two main regimes are outlined below: separation
of property and partnership of acquests.
A third regime, called "community of movables and
acquests," is very rarely encountered. This was the legal regime
that applied to all couples married before July 1970 without a
marriage contract. If you require information on this regime,
please contact your financial planner or notary.
Regime of separation of property
To be governed by this regime, couples must sign a
notarized marriage or civil union contract. Under this regime, each
spouse is free to administer his or her own assets, and each is
solely responsible for his or her own debts unless they are
incurred for the family's everyday needs.
At the dissolution of this regime, usually by
divorce or death, each spouse retains the property he or she owns.
In principle, there is no division of property, but the family
patrimony is divided.
Regime of partnership of acquests
Since July 1, 1970, partnership of acquests has
been the regime of all couples married or united in civil union in
Quebec unless they have signed a marriage contract. The spouses can
also choose this regime through a marriage contract.
Property included and excluded in the
partnership of acquests
Under the regime of partnership of acquests, the
patrimony of each spouse is divided between:
-
private property
-
acquests
In general, private property is the property owned
by each spouse at the time of the marriage or civil union, and
property received by each during the marriage or civil union by
either gift or succession.
Acquests are assets that cannot be qualified as
private. Most assets acquired by the spouses during the
marriage or civil union are classified as acquests.
Dissolution and liquidation of the
regime
After dissolution, usually by divorce or death,
each spouse retains his or her private property, and can ask for a
share of the value of the other spouse's acquests. One spouse may
waive their share of the other's acquests while the other asks for
a share.
It is important to note that it is a division of
value. Each spouse retains ownership of their own acquests. One
spouse cannot claim a right to the other's acquests.
The debtor spouse in the division can reimburse the
other by making a cash payment or by transferring property in
payment of the debt, as negotiated by the spouses.
Are you familiar with the family patrimony
rules that govern the dissolution of your marriage or civil
union?
On July 1, 1989, the Act to amend the Quebec
Civil Code and other legislative provisions respecting the economic
equality of spouses (L.Q. 1989, c. 55) came into effect,
creating family patrimony. The provisions of this law mean that
starting at that time, no matter what matrimonial regime is chosen,
the value of certain categories of "family property" is subject to
partition in the event of the legal separation, dissolution or
annulment of a marriage or civil union. The regime of the marriage
or civil union will determine the outcome of the other
property.
Do you know the partitionable value of your
property under family patrimony rules?
Family patrimony is comprised of the following
assets owned by either of the spouses:
-
family homes or the right to their use
-
the furniture in these homes that is used by the
family
-
motor vehicles used for family purposes
-
benefits accrued during the civil union or
marriage under a pension plan
-
earnings registered under the Act respecting
the Quebec Pension Plan or other similar programs (except in
the case of death)
The following are excluded from family
patrimony:
-
property acquired by gift or succession before or
during the marriage or civil union
-
property other than that listed above
-
when the dissolution is the result of a death,
the benefits accrued under a registered pension plan or under a law
granting the surviving spouse the right to death benefits
Partition of family patrimony
Legal separation and dissolution or annulment of a
marriage or civil union result in the partition of the family
patrimony.
It is important to understand that the partition of
family patrimony is based on value, not nature. The spouses are not
undivided co-owners of the property that makes up the family
patrimony. On the contrary, each spouse holds the right to the
property that belongs to him or her and that is included in the
family patrimony. The partition operations will usually mean that
one spouse owes money to the other. It is the value of the family
patrimony (rather than the property that comprises it) that will be
divided in equal shares between the spouses.
At the time of partition, the debtor spouse can
reimburse the other by making a cash payment or by transferring
property in payment of the debt, whatever the spouses negotiate
between them.
For the purposes of the partition, the first step
is to establish the value of the property that makes up the family
patrimony, no matter which spouse it belongs to. The next step is
to deduct from the value of that property the amount of debts
incurred for their acquisition, improvement, maintenance or
conservation, which gives the net value of the property that makes
up the family patrimony.
Here is an example:
Marc-André and Linda were married on April 1, 2000.
Marc-André bought a house in 2003 for $90,000. He paid for part of
it with savings accrued during the marriage and financed the
balance with a mortgage.
Marc-André and Linda are thinking of getting an
amicable divorce and are wondering how the family patrimony rules
will affect this property. Since the real estate market has grown
considerably, the value of the home is now $150,000, and the
balance of the mortgage is $40,000. What will the partitionable
value of the property be under family patrimony rules?
Market value at time of divorce
|
$150,000
|
(-) Debts for acquisition (current balance)
|
$40,000
|
Net value of family patrimony ($150,000 -$40,000)
|
$110,000
|
Partitionable value
|
$110,000
|
Marc-André will have to give Linda $55,000
($110,000 ÷ 2 = $55,000). The situation would be different if the
home had been purchased before the wedding.
It goes without saying that far more complicated
situations arise every day. For more information on the rules
governing the partition of family patrimony, please ask your
financial planner or notary.
If you are in a common law union... Do you
understand the financial impact of separating from your
spouse?
The legal situation of common law spouses is the
same as two strangers living together. With a few rare exceptions,
the Quebec Civil Code does not recognize the status of
"common law" or de facto spouses. They have no rights and no
obligations toward each other. For example, the provisions related
to the right to support (that is, the right to alimony in certain
cases), family patrimony, matrimonial regimes, the obligation to
contribute to household expenses and responsibilities, and the
protection of the family home do not apply to them.
If during your common law union you have assumed
grocery and other consumption expenses that do not increase the
value of your patrimony, while your spouse paid the mortgage for a
house held as a single owner, it is highly likely that you will be
at a disadvantage in the event of a separation. In the event of the
dissolution of a common law relationship, each spouse remains the
sole owner of property acquired before and during their life
together. No partition applies, even if the property was for family
use, unless the spouses are co-owners.
In these situations, it is extremely important for
common law spouses to sign a cohabitation agreement setting out,
for example, how they will divide property acquired during their
life together.
It is important to note that while the Quebec
Civil Code grants very few rights to common law spouses, it
does stipulate that the rights of children toward their parents and
parents toward their children are the same whether the parents are
married, in a civil union or in a common law union. The way that
support payments are established for the children is exactly the
same, regardless of the parents' marital status.
Have you signed a cohabitation
agreement?
With few exceptions, the Quebec Civil Code
does not recognize common law unions. That means it does not
protect the relationships between people living together in a
conjugal relationship. To establish their rights towards each
other, common law spouses have to sign a cohabitation agreement
setting out the rules that will govern their union and its
potential dissolution.
Although there is no specific form for a
cohabitation agreement, it allows the couple to establish, for
example:
-
The date of the start of their life
together
-
The contribution each will make to the household
expenses and responsibilities
-
The list of property owned by each spouse at the
time they began their life together or signed the agreement
-
The rules governing the non-partitionability of
the shared residence
-
The rules governing the break-up of their life
together, with regard to the division of property, support
payments, use of mediation, etc.
-
Conditions concerning the custody of the
children
Without such an agreement, on separation, each
leaves with his or her own property – that is, what each has paid
for and owns. This means that if you divide your expenses such that
you pay the taxes, the hydro bill, the phone bill and the
groceries, while your spouse makes the car payments (bought in his
or her own name) and the furniture payments (with all invoices in
his or her own name), you'll be leaving the relationship
empty-handed. That's why it is so important to save all the
documents related to purchases of property during your common law
relationship, to establish ownership in the event of a separation,
or to provide for all this in the cohabitation agreement.
Finally, since a cohabitation agreement only
protects you in the event of separation, it is very important for
both spouses to write a notarized will, for protection in the event
of death. Because if you or your common law spouse dies intestate,
the property of the deceased will devolve to the children, if you
have any, or to the deceased's family, not to the surviving
spouse.
Do you know which laws recognize common law
spouses as being equivalent to married spouses?
For several years, common law spouses have been
granted the same rights as married spouses in several areas, but
contrary to popular perception, major legal differences mean that
their rights are not completely protected. We will review several
of the laws that may affect common law spouses and examine the
definition of common law spouses under each.
Income Tax Act (ITA)
In terms of the ITA, a common law spouse is
recognized after 12 uninterrupted months of living together or
immediately upon the birth of a child from the union. Note that the
time spent living together includes periods of under 90 days when
you lived apart because of a break-up.
Quebec Pension Plan (QPP)
In terms of the QPP, a spouse is a person you are
married to or in a civil union with. A common law spouse is a
person you have been living with in a conjugal relationship for at
least 3 years, or 1 year if the union has produced or is expecting
a child, or if you have adopted a child together.
For common law spouses to be recognized, neither of
you can be married to someone else. You must be either divorced or
legally separated.
In the event of separation, it is possible to ask
to split the earnings registered under the QPP. The total earnings
registered for each spouse will be split in equal shares between
the two of them on their statement of contribution. For married
spouses, this split will be done automatically unless there is a
judgment stating otherwise. For common law spouses, the split can
only be carried out with the agreement of both parties.
Pension plans governed by the Supplemental
Pension Plans Act (Quebec law)
A spouse is a person you are married to or in a
civil or common law union with. A common law spouse is someone you
have been living with in a conjugal relationship for at least 3
years, or 1 year if the union has produced or is expecting a child,
or if you have adopted a child together.
For common law spouses to be recognized, neither of
you can be married to someone else. You must be divorced. If you
are legally separated, neither your married spouse (ex-spouse) nor
your common law spouse will be recognized.
Civil Code of Quebec (CCQ)
In legal terms, common law spouses are rarely
recognized under the Quebec Civil Code! Even if you have been
living together for 30 years and have children, the CCQ does not
recognize common law spouses. You are therefore not subject to the
partition of family patrimony, and if there is no will leaving your
assets to your spouse, he or she will inherit NOTHING! Your common
law spouse can only receive your insurance benefits if you have
made an official beneficiary designation within the policy. A
common law spouse who meets the eligibility conditions described
above has a right to pension plans and QPP survivor's benefits.
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