The Family Law Act should bring some clarity to the often murky issue of dividing up property between couples going through separation and divorce, says a lawyer who specializes in the field.
"I think it certainly creates a clearer process and one that will ultimately be simpler for parties," said Beatrice McCutcheon, who works for Cook Roberts LLP in Victoria.
The Family Law Act, which came into effect Monday, replaces the 34-year-old Family Relations Act, and prime among the changes in McCutcheon's opinion is a change in the definition of assets that are subject to division.
Where such assets used to be property used for a family purpose, it's now property acquired by either of the spouses during the time of their relationship, regardless of how it's used.
"The classic example is a home acquired by a spouse before the relationship and their new spouse moves into it," McCutcheon said. "Under the old Act, that would have become a family asset whereas under the new Act, that would be excluded property."
There are some provisos. The subsequent increase in values of assets that were acquired before the relationship are included in the split, and the Act notably lists gifts and inheritances received by one spouse during the relationship as excluded from property division.
"It's moving to more of a system of sharing what couples acquire while they're together, which I think accords more closely with what people expect or perceive is fair," McCutcheon said.
"Under the old system, it often came up that if one spouse received an inheritance during the relationship and the other spouse received an inheritance after the relationship ended, there was a perception of unfairness that one of those inheritances got split and the other didn't."
While increases in values of assets are included in the division, so are increases in debt. Regardless of who acquires the debt, the spouses are equally responsible, said McCutcheon, even if they're running up that debt unequally through credit cards and lines of credit.
"It's going to decrease the overall pot for division," McCutcheon said.
But the Act does allow for assets to be divided other than 50-50, if an equal division would be "significantly unfair." The term has not been defined but McCutcheon predicts will pose a higher standard than simply "unfair" under the old Act.
One possibility for meeting the threshold is a spouse who runs up large gambling debts.
"There is still a recourse for a situation where one spouse acquired debts that weren't for the family's debt," McCutcheon said.
Common law couples who've been together for two years will also be subject to equal division of property under the Family Law Act, the same as formally-married couples. But couples of both types can get around the so-called "50-50 rule" through mutual agreement.
Judges can strike such agreements down only if they're found to be significantly unfair or made in an unfair fashion.
"For example if a spouse failed to disclose significant property or debt prior to the agreement being executed or one of the spouses did not understand the nature or consequences of the agreement, and that can go to whether they've received appropriate legal advice," McCutcheon said.
