Your personal and family situation

If you are married or in a civil union:

Do you know 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.

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.

Do you know how family patrimony rules will affect the partition of your assets at 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 since then, 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.

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
• 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, 2010. Marc-André bought a house in 2013 for $190,000. 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 $350,000, and the balance of the mortgage is $110,000. What will the partitionable value of the property be under family patrimony rules?

Marc-André will owe Linda $120,000 ($240,000 ÷ 2 = $120,000). 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 relationship:

Do you understand the financial impact of separating from your partner?

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 petition for alimony), family patrimony, matrimonial regimes, the obligation to contribute to household expenses and responsibilities, and the protection of the family residence 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. There is no partition, even if the property was serving for the use of the household.

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 provides for very few obligations between common law spouses, it does stipulate that the obligations 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 rights and obligations towards each other, common law spouses have to sign a cohabitation agreement.

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
• 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, like the partition of property, support payments or the use of mediation

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.