What Qualifies as Exempt Property in Alberta?
Exempt property in Alberta is value that is not shared on division because of where it came from, not because of whose name is on it. The Family Property Act names the categories, and an exemption is kept only where that value can still be identified.
The Exempt Categories
The Family Property Act applies to married spouses and to adult interdependent partners, and it has applied to adult interdependent partners since 1 January 2020. It names the categories of property that can be exempt from division, and each category is defined by the source the property came from.
A gift from a third party. Property given to one party by someone outside the couple is an exempt category under the Family Property Act.
An inheritance. Property one party receives as an inheritance is an exempt category, and it is the inheritance itself that carries the exemption rather than the account it happens to sit in.
Property owned before the relationship began. What counts as "before" depends on the couple, and the Act gives three answers.
For married spouses who were not living together in a relationship of interdependence with each other immediately before they married, it is property acquired before the marriage.
For married spouses who were living together in a relationship of interdependence with each other immediately before they married, it is property acquired before that relationship of interdependence began.
For adult interdependent partners, it is property acquired before the relationship of interdependence began.
An award of damages in tort. An award of damages in tort is an exempt category, unless the award compensates both parties.
Insurance proceeds. Insurance proceeds paid to one party are an exempt category, unless the proceeds compensate both parties.
The exemption is of the value the property had on a particular date: the later of the date it was acquired and, depending on which of the three cases above applies, the date of the marriage or the date the relationship of interdependence began.
That is a different date from the one used for the property being divided. Unless the parties have a written agreement that meets the Act's requirements, the property being divided is valued at the date of the trial.
An exemption depends on the statutory category and the facts concerning the particular property.
What an Exemption Does Not Do
An exemption protects the value that can still be identified, and that is the limit of what it does.
The increase in value on exempt property, and income from it, are dealt with as the court considers just and equitable. Neither is automatically kept by the party who brought the property in.
Money mixed into a shared account, or spent on an asset the couple shares, may be hard or impossible to trace. Where the value cannot be followed, the exemption cannot be shown.
Examples to discuss with your lawyer include:
- 1
An inheritance deposited into a joint account and spent on day-to-day costs.
- 2
A gift used as a down payment on a home held in both names.
- 3
Property owned beforehand that has been sold, with the proceeds mixed into other holdings.
- 4
An exempt amount that was never valued at the date it came in.
- 5
A claim supported by memory rather than by documents.
These examples do not establish that an exemption has been lost. Ask how the applicable rules and records affect the particular asset.
The Value, Not the Thing
An exemption attaches to an amount of value at a date, not to an object forever.
The asset can be sold, replaced or changed in form. The question then becomes whether the exempt value can still be followed into whatever replaced it.
Take an amount received as an inheritance and left in an account of its own, in the recipient's name, with statements covering the whole period. The amount is identifiable, and the record shows where it came from and where it stayed.
Take the same amount used instead to pay down a debt the couple shares. The money has gone into a shared asset, and what is left is an argument about what it paid for.
The two cases differ in what can be shown, not in what either party deserves. Neither one says what a court would do with either amount.
Information to Discuss With Your Lawyer
Ask your lawyer which records are needed to address:
- 1
What was received, described precisely enough to identify it.
- 2
When it was received, with the date recorded.
- 3
Who it came from, and on what terms.
- 4
What it was worth at that date, with the statement, appraisal or transfer document that shows the figure.
- 5
Where it went, traced through every account or asset it passed into.
- 6
Whether it stayed separate, or was mixed with property the couple shares.
- 7
What documents show each of those points, gathered and kept together.
Keep records you lawfully hold and ask which ones are relevant; this list does not determine the outcome of an exemption claim.
Where This Fits
Exempt property is one part of family property division in Alberta, which is the exercise of dividing what a couple owns and owes when the relationship ends.
A family business on divorce raises the same tracing questions, with one more attached: what the interest is worth, and how that value is established.
Both questions are answered from the same records, which is why the records are worth keeping from the start.
When to Talk to a Lawyer
Circumstances in which to get advice:
- 1
An inheritance or a gift that has been mixed with property the couple shares.
- 2
Property one party owned beforehand that has since changed form.
- 3
A claim where the records are incomplete or cannot be found.
- 4
A deadline approaching, where which limit applies to your claim is a question to put to a lawyer.
Frequently Asked Questions
Property owned before the marriage is an exempt category under Alberta's Family Property Act, and the exemption is of its value at that date - though where the couple were already living together in a relationship of interdependence immediately before they married, the relevant date is when that relationship began. Any increase in value since then is a separate question, dealt with as the court considers just and equitable. Ownership alone does not settle it.
An inheritance is an exempt category under Alberta's Family Property Act, and a gift from a third party is another. The exemption holds for the value that can still be identified, so an inheritance mixed into shared accounts or spent on a shared asset may be difficult to trace.
Talk to a Calgary Family Lawyer
A Calgary family lawyer advises on whether an exemption can be claimed, on what it would take to show it, and on how it fits the rest of the division.