Dividing the family patrimony

One of the important considerations in a divorce application is the obligation of the spouses to divide their assets in accordance with the law. Of course, the spouses can choose mutually agree on terms slightly different but the essence of the law should be preserved in their agreement.  

Let’s look at the family patrimony and see what it consists of and how it is divided.

What is a family patrimony? 

In the Province of Quebec, your assets will be categorized in two pools of assets. The first pool is composed of assets subjected to the rules of the family patrimony and the second pool is composed of assets subjected to the rules of the matrimonial regime you may have adopted at the moment or during your marriage, or, in the absence of a defined regime, the default regime of the partnership of acquests will apply. 

The family patrimony is composed of a certain specific assets, namely, (1) the family residence and the furniture inside, (2) the secondary residence and furniture inside, if you may have one, (3) vehicles used by the family, (4) RRSP’s, (5) pension plans along with (6) any earnings the spouses may have acquired under the Quebec Pension Plan (QPP) or the Canada Pension Plan (CPP). 

What’s important to note is that, regardless who owns any of the above assets, the net value of all of them combined will be divided equally between you and your spouse. 

How do we divide the family patrimony? 

As mentioned before, the net value of the family patrimony is to be divided equally between the spouses. Let’s look at a concrete example to see how this works. 

Take for instance that you have a family residence registered only to your husband’s name worth $400,000, two cars in each of your names each worth $25,000 and you have some RRSP’s only in your name for $50,000, then, the total value of the family patrimony will be equal to $500,000 assuming you have no debt or loans to pay off. Therefore, you are each entitled to $250,000 when dividing the family patrimony. As you can see, for the purposes of dividing the family patrimony, it is irrelevant who owns the asset. What’s important is that the family residence and the RRSP is owned by at least one of the spouses. 

What if I received an inheritance or a donation, will that be part of the family patrimony? 

According to the Civil Code of Quebec, an inheritance or a donation is exempt from the rules of partition. If, during your marriage, you obtain $250,000 in inheritance and you used this amount to pay off your home mortgage, then, you are entitled to deduct the sum of $250,000 from the net value of the family patrimony so that your inheritance does not get equally divided since it was used to increase the value of the family patrimony. 

In our previous example, your husband owned a $400,000 property, assuming there was $300,000 mortgage to pay off on this property and you use your inheritance of $250,000 to pay down the mortgage to $50,000, then the net value of your family residence goes from $100,000 ($400,000 value – $300,000 mortgage) to $350,000 ($400,000 value – $50,000 paid down mortgage).  

Assuming that, at the moment of your separation, you and your spouse have two cars each worth $25,000 and you have RRSP’s of $50,000 registered in your own name, then, the net value of the family patrimony amounts to $450,000. If we apply the rules of the family patrimony, then each spouse will be entitled to get $225,000 representing $450,000 divided by two. However, since you had received an inheritance, the Court will deduct the value of your inheritance from the net value of the family patrimony and divide the rest equally between you and your spouse. This will be $450,000 less $250,000 being equal to $200,000 representing the revised value of the family patrimony. You will be entitled to keep your $250,000 inheritance and entitled to get half of the $200,000 representing a total sum of $350,000. 

The same calculation applies to any donation that you or your spouse may have received during the marriage. 

What happens to the family patrimony if we have a marriage contract? 

One way that married couples can plan a potential partition of their assets is by entering into a marriage contract. It is important to note that a marriage contract must absolutely follow certain formalities for it to be binding, for instance, if a marriage contract is not notarized, then, it will produce no legal effects. Furthermore, the terms of the marriage contract does not apply to ‘all’ the assets accumulated during the marriage.  In fact, the rules of the partition of the family patrimony takes precedence over any agreement, contract or convention executed prior to the date of the filing of the divorce application. In other words, the rules establishing the division of the family patrimony will apply to the assets composing the family patrimony, but for all other assets, the terms of the marriage contract shall apply. 

For instance, let’s assume that on the date you separated with your spouse, you had a house, two cars, an RRSP account along with $500,000 of rental income property. Also, let’s assume that you have signed a marriage contract where it is stated that 75% of all the assets accumulated during the marriage will go to you and 25% will go to your spouse. In this example, the Court will first apply the rules of the family patrimony to equally divide the value of the house, the two cars and RRSP even though the marriage contract stated that you were entitled to 75%. Then, with respect to the other remaining assets, in this case, a rental income property, the Court will apply the terms of the marriage contract whereby you will get 75% of its value and your spouse will end up with 25% of its value.