Are Inheritances and Gifts Divided in an Alberta Divorce or Separation?

If you received an inheritance, a gift from a parent, or owned a home before you got together, you may worry that a separation puts it at risk. In Alberta, the answer is often that the original value is protected, but not always everything that has happened to it since.

This article explains how the Family Property Act treats exempt property for married spouses and adult interdependent partners, what is not protected, and how you show the Court what you say is exempt. Every situation depends on its facts, so a lawyer can confirm how this applies to you.

This article covers the law of Alberta.

The starting point: equal sharing, with exemptions

The Court may divide all property owned by spouses or adult interdependent partners, whether it is owned jointly or by one person alone. Property acquired during the marriage that is not exempt is generally divided equally for spouses, and partners have the same equal rule for property acquired after their relationship began.

That equal split is not absolute. It gives way where it would not be just and equitable after the Court considers the factors listed in section 8 of the Act. Exempt property is carved out before that sharing happens.

What is exempt under section 7(2)

Section 7(2) of the Family Property Act exempts certain property from distribution. The main categories are:

• Property received as a gift from a third party, and property received by inheritance.
• Property a spouse acquired before the marriage, where there was no interdependent relationship beforehand.
• Property acquired before an interdependent relationship began, and property an adult interdependent partner acquired before their relationship began.
• Tort damages or settlements awarded to one spouse or partner, and proceeds of a non-property insurance policy.

There is an exception to the last category. Damages, settlements and insurance proceeds are not exempt to the extent that they compensate a loss suffered by both spouses or partners.

What is exempt is the market value of the property on a fixed date. That date is the later of the marriage date (or the date the interdependent relationship began, where applicable) and the date the property was acquired.

What is not protected

Exempt does not mean untouchable forever. The growth in value of exempt property is not exempt. This is the gap between its exempt value and its market value at trial, and it includes property obtained by exchange or from sale proceeds. The Court distributes that growth in a manner that is just and equitable after considering section 8, so it is not automatically shared equally.

Three other situations are also distributed on the just-and-equitable basis instead of being exempt:

• Property bought with income from exempt property during the marriage or relationship.
• Property acquired after a decree nisi, nullity, judicial separation or declaration of irreconcilability, or after partners became former partners.
• Gifts between spouses or partners.

Unless a written agreement that meets section 38 says otherwise, property is valued as of the date of the trial.

How the Court decides what is just and equitable

Section 8 lists the matters the Court considers. They include contributions to the family, including homemaking and parenting, contributions to a business or farm, and contributions to acquiring, keeping or improving property. They also include each party's income, earning capacity, liabilities and resources, and the length of the relationship.

Other listed matters include whether property was acquired while the parties lived separate and apart, any oral or written agreement, earlier distributions, tax liability from a sale or transfer, dissipation of property, and any other relevant fact or circumstance. How these apply to a particular inheritance or gift depends on the facts. Questions such as mixing exempt money with other money, or putting it into the family home, turn on case law and are worth raising with a lawyer.

Proving it, agreements and older separations

Each party must file a sworn statement disclosing all their property wherever located, including property disposed of within one year before the application, and serve it on the other party. The Court of King's Bench Financial Disclosure Statement includes a sworn, itemized list of income, assets and liabilities, and a list of property claimed as exempt under section 7.

A written agreement can change these default rules. It must meet section 38, which requires each party to acknowledge in writing, apart from the other, that they understand its effect and the claims they may be giving up, and to sign freely before a lawyer who does not act for the other party. Adult interdependent partners can also opt out of the default rules by signing their own agreement. A premarital agreement is unenforceable after marriage unless it clearly states the parties meant it to continue.

Timing matters too. Spouses who were divorced or living separate and apart before January 1, 2020 generally stay under the old Matrimonial Property Act, with limited exceptions. For adult interdependent partners, the Act applies only if they had not begun living separate and apart before that date.

What to do next

• Gather proof of each gift or inheritance, such as estate documents, bank records and dates received.
• Collect records showing what you owned on the date the relationship began.
• Note the value of each item at the start of the relationship or when you acquired it, whichever is later.
• List every item you claim as exempt in your financial disclosure.
• Check whether you have any written agreement and whether it was signed with independent legal advice.
• Speak to a family lawyer before separating or signing anything, especially about growth in value and your deadlines.

Frequently asked questions