Whether you’re dealing with a divorce or trying to recover after an accident left you injured (or both), we understand that it’s easy to feel overwhelmed. You may be going through a difficult time, feeling skeptical, and looking for a law firm you can trust… but Litco Law will be here for you through it all. Though we don’t handle divorce-related legal services directly, our clients occasionally ask whether a divorce can affect a Personal Injury (PI) settlement. It’s key to have a trusted Personal Injury lawyer by your side to help you understand if your claim could be included in the assets divided in a marriage separation.
In Alberta, the Family Property Act (FPA) is the law used to sort and allocate property when a marriage ends. Its purpose is to make sure that matrimonial property and debts are divided equally between the spouses, but the FPA allows for some kinds of property to be exempt from division.
*Note: Should you want to do more research on your own, exempt property is also mentioned in the Matrimonial Property Act, section 7(2).
Under the FPA, property that is exempt from division includes:
- Assets owned prior to the marriage;
- Inherited assets;
- Property received as a gift from a third party;
- Insurance proceeds; and
- Proceeds from a Personal Injury claim (though an individual should contact a Family Lawyer regarding specific steps needed to ensure PI proceeds remain exempt)
To classify exempt property (or more specifically, PI claim proceeds) this way, there must be evidence that the property or money still exists or can be traced to an existing asset. If the property was placed in a joint account or comingled with your spouse’s property, losing traceability, then it may not be exempt anymore.
However, once proven exempt, the property’s market value—from when the marriage started, or from when the PI proceeds were received—will be exempt from division. If the value of the exempt property has gone up during the marriage, then the increase in value could be divided between the spouses. The catch here is that the law does not declare that the increase in value should be divided equally; rather, the FPA says that this value should be divided fairly (instead of just split in two halves).
The judge will determine what is fair by considering:
- The roles and contributions of each spouse during the relationship;
- The income, earning capacity, liabilities, obligations, and other financial resources of each spouse;
- The length of the relationship;
- Previous court orders
- Any oral or written agreements between the parties;
- Tax liabilities; and
- Any other relevant circumstances or factors.
We’re here for you, no matter what.
Still have questions? At Litco Law, we’ll find you an answer… even if we’re not it. Our Personal Injury lawyers can provide information through a free consultation, and refer you to an Alberta Matrimonial Property lawyer to further explain your full range of options. Just reach out to us in the chat, through an email, or over the phone to get answers within 24 hours (or by the next business day on weekends). This caring team is always standing by and ready to help!