Matrimonial regimes in Canada
In Canada, civil union and marriage confront spouses with 3 choices in the context of a matrimonial regime: partnership of acquests, separation of property and community of property, in the context of drafting their marriage contract. These systems group together the matrimonial regimes existing in North America. What are their respective characteristics?
A quick reminder of the matrimonial regime
The official celebration of the union of two life partners ends with the signing of a marriage contract. The document sets out the wishes, expectations and desires of the spouses. It also sets out the terms and conditions of the couple’s life, including their matrimonial regime.
Also known as the civil union regime, the matrimonial regime sets out the basic rules for the governance of property. It also establishes the rules for the administration of property during the union and its distribution at the end of the union. It does not include the governance of the couple’s family patrimony.
In Canada, the matrimonial regime is divided into 3 categories:
- partnership of acquests ;
- community of property
- separation of property.
The spouses are free to choose the regime that best suits their expectations and situation.
Partnership of acquests
The default matrimonial regime in Canada, the partnership of acquests appeared on July1, 1970. What does it consist of?
What is the matrimonial regime of partnership of acquests?
The regime of partnership of acquests applies to civil union spouses who have not yet determined their regime. It also applies to spouses married since July1, 1970.
The regime admits two categories of property: acquests and private property. While the first category refers to property not declared by law, the second category refers to property acquired by the spouses at the beginning and during the regime.
The system administers their own property and their acquests independently. Under the Civil Code of Quebec, the spouses can claim an amount equal to the partitionable value of the acquests if the marriage dissolves.
In Canada, a marriage or civil union without a contract results in the automatic adoption of the legal regime of partnership of acquests. The system is very popular and has a number of advantages, including the enhancement of personal assets and the preservation of assets before the regime is liquidated. What provisions are hidden behind this advantageous system?
The different types of property under the regime
The partnership of acquests includes two types of property:
- own property ;
- acquests.
Personal property is property acquired before the union. It remains in the possession of the owner at the end of the regime. It includes: savings, property received as an inheritance and gifts. In addition to these assets, there are alimony payments from a previous marriage, compensation payments related to own property and pension plan benefits. Land is part of the own property.
Acquests are assets accumulated throughout the marriage. On the other hand, the property and debts of each spouse obtained before the marriage are proper property. However, their fruits become acquests.
Rights and duties of the spouses
In a partnership of acquests, each spouse is free to organize, transfer and use their property and income as they see fit. This freedom entails a responsibility. They are thus responsible for their debts, except for debts incurred for family needs.
An exception confirms this fundamental rule. A spouse must obtain the consent of his or her partner to give away a significant amount of his or her acquests. For example, the consent of the spouse is required for the donation of real estate acquired during the marriage.
Distribution of property
At the end of the marriage contract, the division of property is equitable. Before the marriage contract is signed, the ex-spouses settle the distribution of the family property.
Each spouse is then free to keep the value of their own property. Then, they calculate the value of the acquests of each spouse. The calculation takes into account several variables: the debts attached to the property, the portrait of the property and the acquests and the rewards (the adjustments affecting the amount of property used for acquests). Given the complexity of the operation, the services of a legal expert are required.
In the event of the death of a spouse, the heirs of the deceased cannot collect the acquests if the survivor refuses to share. A mediator will ease tensions and help them find common ground. As a last resort, the parties can take the matter to court. For more information, you can also contact a legal professional.
What are the characteristics of the regime of partnership of acquests?
The regime takes precedence over the sharing of the value of the assets accumulated throughout the marriage. It takes into account the wishes of the spouses and allows them to exclude certain assets.
The death of a spouse, a change of contract or a divorce puts an end to the current regime. It then triggers a division of property. Before any division, the spouses must settle the division of the family assets.
Then comes the actual division. They calculate the value of the assets acquired. The estimation requires the setting up of a portrait of the own property and the acquests. Then the rewards are determined, which allow the recovery of the amount of an own property used for acquests. The debts attached to the property are also taken into account. The partition completes the procedures.
Community of property
The community of property was the default matrimonial regime in Canada before the partnership of acquests regime appeared.
What is the community of property matrimonial regime?
In the community of property regime, the property of the spouses is divided into :
- in private property : : furniture, gifts and some compensations and allowances
- in common property : property acquired during the marriage
- in the wife’s reserved property : fruit of her personal work
In case of divorce, the regime provides for a division in kind, but not in value. In other words, the ex-partners become co-owners of the property, but cannot share its value.
The community property regime was the default regime in Canada until 1970. It is still in use today, but does not seem to attract many people. The semblance of equal rights between the spouses and the complexity of the procedures explain its lack of interest. Its validation requires the services of a notary. The system seems to give reason to the male power, but takes into account the needs of each spouse. How does this matrimonial regime work?
The different types of property according to the regime
The community property regime has 3 categories of property: community property, personal property and reserved property.
Community property
Community property or common property includes movable property acquired and accumulated from the time of the marriage. It also includes movable and immovable acquisitions, with the exception of property purchased in the personal name of a spouse.
One person in the household is designated to work and provide for the family. His or her income and its fruits belong to this category. Similarly, professional income, in this case unemployment benefits, compensation in lieu of notice and retirement pensions are attached to the joint estate. Real estate income and capital income are also included. It should be noted that both spouses are allowed to work.
A spouse is allowed to add to the community property his or her personal effect after having redefined it as common property.
Own property
Personal property defines personal property that will remain in individual ownership throughout the marriage. It includes real estate acquired before the marriage, gifts, bequests and compensation received as damages (as a result of moral or physical injury).
Personal effects, including clothing and jewelry, are property of the marriage. However, a piece of jewelry acquired and defined as an investment becomes common property.
Instruments used for the exercise of any profession, even if acquired with the help of the common patrimony, will fall into this list.
Each own property is the object of a formal document as proof of its ownership.
Property reserved for the other spouse
The property reserved for the other spouse is often attributed to the wife. This includes her salary and personal effects acquired through her savings. This category also includes real estate acquired through her personal work.
The rights of each spouse in the regime
Under the community of property regime, each spouse has a specific right.
The husband’s rights
The husband has the right to use, sell and organize all of his own property as he pleases. He also has control over the common property. However, this power remains limited. The sale, mortgage and gift of a common property and a property used by the family are impossible without the approval of the wife or the court.
Rights of the wife
The wife has the right to administer, sell and use her own property. She is also allowed to manage her reserved property. However, she must obtain the consent of her husband or the court before selling, donating or mortgaging reserved property. The restriction also applies to the family’s movable property.
In addition, the family residence and debts incurred to meet the needs of the family require joint management by the spouses.
The distribution of property in the household
In the event of a divorce, how is the property divided between private property, common property and reserved property?
The division of property
If the marriage is dissolved, the ex-spouses first proceed to the division of the family patrimony. The law requires an equitable division of the value of the joint property. It is only after this step that the division of the remaining property takes place, depending on the matrimonial regime.
In the community of property, each spouse keeps his or her own property. They share equally the community property and the property reserved for the other spouse.
Refusal to share the community property
The wife may keep her reserved property provided she renounces the community property. Each spouse may exercise his or her right of veto and refuse to share in the community property in the event of a negative balance sheet.
The spouse does not have this right. He must share the community property even if his balance sheet is negative. He may refuse to distribute the reserved property provided he leaves the community property.
The choice of matrimonial regime seems to be a challenge for couples. While some couples have no problem dividing their assets equally, others prefer to keep them as individual property. The regime of separation of property works in this direction and favours the conservation of property for the respective owners. This system is not often used, but it does provide a number of advantages.
The separation of property
The separation of property is the solution to the distribution of property between the spouses in the second marriage, but what is it?
What are the characteristics of the matrimonial regime of separation of property?
During the marriage, the regime gives them control over their property. It also makes the debtor responsible for his or her debts.
However, no matrimonial regime makes a spouse independent over the family home and debts incurred to meet family needs.
At the end of the marriage, the regime of separation of property does not imply any equitable distribution of the accumulated property, with the exception of the family patrimony. Thus, each spouse leaves with his or her own property. The rest is divided equally.
What is the regime of separation of property?
The separation of property is a matrimonial regime that commits two people at the time of their civil union, their marriage or the signature of a civil union.
The separation of property allows each person to be the sole owner and responsible for their respective property, including real estate acquired before or during the period of their life together. It stipulates the conservation of the affairs as their own property and not as the property of the household. The validation of the system requires the presence of a notary.
The separation of property facilitates the management of all the property as they wish independently of each other.
What are the advantages of separation of property?
The practice of a risky profession by a spouse protects financially his or her partner as well as his or her assets. In addition, the system favours the appropriation of assets received as gifts and inheritance. In the case of a previous union, the child will inherit all the assets of his or her parent, if the latter dies.
The system offers complete financial independence to the spouses. It provides additional security to the entrepreneur spouse. Indeed, creditors will not apply any pressure or rights on the assets of the married couple as well as on those of the family.
How is the management of the assets carried out?
According to the Civil Code, personal property includes: real estate and movable property acquired before, during and after the marriage. Their management remains personal.
There are some exceptions to the system. The spouse who owns the family residence can neither donate nor sell the real estate without his or her partner’s approval. Similarly, full power is questioned in the event of imprudence that jeopardizes the interests of the household.
These measures do not prevent the spouses from jointly investing in a property. The property rights will then be divided according to the measures previously defined. The case will also require an indivision agreement (a clause to facilitate the management of the property).
In the event of a dispute, a lawyer can help you manage your joint property.
How do you set up the regime?
The establishment of the regimetakes place under the supervision of a notary. His presence is essential to validate the choice. This choice is clearly indicated in the marriage contract. The notary also takes care of the modifications of the contract and the matrimonial system.
In addition, the separation of property implies the separation of income. From a tax point of view, the provision requires a new tax regime. The spouses are taxed together and share a taxable income applied to the total income of each.
What does the plan offer in the event of divorce?
If the couple breaks up, the separation of property requires an agreement on the distribution of the assets acquired during the life together. All parties involved must obtain full enjoyment of their own property during the division phase. A notary or a judge manages any disagreements.
In the event of the death of a spouse, his or her own property is transferred to the assets to be transmitted. The surviving spouse can recover half of the capital, which will be deducted from a quarter.
For more information on the matrimonial regime: Government of Canada website.
