What Is A Family Patrimony (Dividing Assets Under Quebec Laws)

What assets form the family patrimony?

How is the family patrimony divided when married spouses divorce?

In this article, we will look at all you need to know about the family patrimony.

We will look at what assets it includes, how the net value is calculated and how it is divided in the event of a divorce.

Are you ready?

Let’s get started!!

Table of Contents

What is a family patrimony

Under Quebec family laws, when you get married or form a civil union, through the operation of the law, a family patrimony is created.

The Civil Code of Quebec, in article 414, establishes the family patrimony:

Marriage entails the establishment of a family patrimony consisting of certain property of the spouses regardless of which of them holds a right of ownership in that property.

Consider the family patrimony to be a pool of assets specifically designated by law owned by either spouse.

The family patrimony is established on the marriage date and will remain until the separation or divorce of the parties.

The family patrimony will include the following assets:

Family residence where the couple live
Secondary residence like a cottage or villa used by the couple
All furniture garnishing the family residence and secondary residence
Cars and motor vehicles used by the family
Registered retirement savings plan
Pension plan

The reason why these assets are included in a pool of assets called the family patrimony is due to their special treatment they get in the context of a divorce or dissolution of civil union.

The purpose of the family patrimony

The Quebec family law has created the concept of a family patrimony to provide married couples and those in a civil union some protection in the division of the family assets upon divorce or separation.

Historically, the man acted as the breadwinner while the woman used to stay home and take care of the family and raise the children.

Often, the wife was economically dependent on her husband.

Upon separation, the wife was financially vulnerable and suffered prejudice as all the assets were owned by the husband.

Due to this inequality, the concept of family patrimony was established.

The law designated some properties like the house, furniture, cars and RRSP, for example, and determined that regardless of ownership, both spouses must equally share the net value of the family patrimony assets.

This guaranteed a fair share in some of the most important family assets a couple may purchase together during their marital union.

What assets are included in the family patrimony

The family patrimony is composed of very specific assets.

Article 415 of the Civil Code of Quebec outlines the assets that should be included in the family patrimony, it states:

The family patrimony is composed of the following property owned by one or the other of the spouses: the residences of the family or the rights which confer use of them, the movable property with which they are furnished or decorated and which serves for the use of the household, the motor vehicles used for family travel and the benefits accrued during the marriage under a retirement plan. The payment of contributions into a pension plan entails an accrual of benefits under the pension plan; so does the accumulation of service recognized for the purposes of a pension plan.

This patrimony also includes the registered earnings, during the marriage, of each spouse pursuant to the Act respecting the Québec Pension Plan (chapter R-9) or to similar plans.

The earnings contemplated in the second paragraph and accrued benefits under a retirement plan governed or established by an Act which grants a right to death benefits to the surviving spouse where the marriage is dissolved as a result of death are, however, excluded from the family patrimony.

Property devolved to one of the spouses by succession or gift before or during the marriage is also excluded from the family patrimony.

For the purposes of the rules on family patrimony, a retirement plan is any of the following:

— a plan governed by the Supplemental Pension Plans Act (chapter R-15.1) or by the Voluntary Retirement Savings Plans Act (chapter R-17.0.1) or that would be governed by one of those Acts if one of them applied where the spouse works;

— a retirement plan governed by a similar Act of a legislative jurisdiction other than the Parliament of Québec;

— a plan established by an Act of the Parliament of Québec or of another legislative jurisdiction;

— a retirement-savings plan;

— any other retirement-savings instrument, including an annuity contract, into which sums from any of such plans have been transferred.

Based on this article, we can conclude that the following assets are family patrimony assets:

Family home
Secondary home
Villa
Cottage
Condo
All types of furniture like beds, TB, appliances
Cars
Boats
Motorcycles
Any motor vehicle used by the daily
RRSPs
Pension plans
Canada pension plans (CPP)
Quebec pension plan (QPP)

If a property does not specifically qualify as a family patrimony asset, then it will not be part of the family patrimony pool.

What assets are no included in the family patrimony

All property that is not specifically named as a family patrimony asset is therefore excluded from the family patrimony.

Any property used by a spouse personally will remain excluded from the family patrimony.

To give you an idea of the type of property excluded from the family patrimony pool, we have put together a short list:

Money in a bank account
Term deposits
GIC
Mutual funds
Stock investments
Business ownership
Gifts
Inheritances
Profit-sharing plan in a company
Non-registered plans
Purely personal property

The rule of thumb is: if it does not qualify as a family patrimony item, then it’s excluded.

How is the family patrimony divided

Step 1: Identify the assets qualifying as family patrimony assets

The first step is to define what assets are part of the family patrimony.

Based on the legal definition of the family patrimony, you are looking to see if the spouses own a family residence, furniture, cars, RRSP and pension plans.

Take for example an average couple who bought a house together, each owning a car and having contributed to their RRSP during their marriage.

To keep this example simple, let’s assume that all the family patrimony assets were acquired during the marriage.

The family patrimony assets are therefore:

Family residence
Car in wife’s name
Car in husband’s name
RRSP in wife’s name
RRSP in husband’s name

Step 2: Establish the net value of the family patrimony

The next step is to establish the net value of the assets composing the family patrimony.

This step entails that you look at each asset, see who owns it and how much it’s worth.

Here is what we have identified:

House: 100% in the name of the wife worth $400,000 and $150,000 in mortgage
Car 1: 100% in the name of the wife worth $20,000 and without any car loan
Car 2: 100% in the name of husband worth $30,000 with $15,000 of car loan remaining to pay
RRSP 1: 100% in the name of husband worth $100,000
RRSP 2: 100% in the name of wife worth $50,000

The total gross value of the family patrimony is $600,000.

The total debt and liabilities amount to $165,000.

The net value of the family patrimony is $435,000.

Step 3: Calculate each spouse’s share in the family patrimony

Once we have the net value of the family patrimony, we must calculate each spouse’s share in the family patrimony.

The law makes this quite simple.

Each spouse is entitled to 50% of the net value of the family patrimony.

In our example, it’s $435,000 / 2 = $217,500.

Step 4: Perform a compensation

The last step is to compensate for what the spouses have and what they are entitled to.

Let’s assume that each spouse wants to keep the assets in their name.

In our example, the wife owns $320,000 in family patrimony assets.

The husband owns $115,000 of family patrimony assets.

So if they are each entitled to $217,500, this means that the wife must pay $102,500 to the husband.

This payment is the compensation payment to ensure that each spouse ends up with half of the net value of the family patrimony.

As of what date do we evaluate the family patrimony assets

The family patrimony value is evaluated as of the date a spouse files a divorce application in court.

So two dates are important:

The establishment of the family patrimony upon marriage
The end of the family patrimony upon the filing of the divorce application in court

The family patrimony is established as of the marriage date and its value will then be determined as of the date a spouse files for divorce.

In some cases, the court may consider a date other than the divorce application filing date to evaluate the family patrimony.

Namely, the court can evaluate the value of the assets and liabilities as of the date the spouses separated.

If a spouse wants to use the separation date as the evaluation date of the family patrimony, the spouse in question must specifically make the request.

Without a request to this effect, the default date will be the date a divorce application is filed in court.

Are there any deductions possible from the value of the family patrimony

Under the Quebec family laws, a spouse may deduct certain assets from the value of the family patrimony.

The following assets can be deducted:

Property owned by a spouse before the marriage
Property acquired during the marriage using proceeds coming from a succession
Property acquired during the marriage using proceedings coming from a gift

In other words, if a spouse receives $50,000 as an inheritance and uses that money to pay off $50,000 of a mortgage on the family residence, this contribution will not be included in the value of the family patrimony.

Not only the contribution of $50,000 will not be part of the value of the family patrimony but also any increase in value on the $50,000 can also be deducted.

The calculation may get complicated so in the event you have received an inheritance or a gift and used it to purchase a family patrimony asset, you are better off to speak to a divorce lawyer to understand the rules related to the partition.

Exception to the family patrimony division

In some exceptional cases, the law gives the power to the courts to exceptionally order the non-partition partition of the family patrimony.

Upon request of a spouse, the court can make an exception to the rule of partition into equal parts:

when it will result from an injustice
due to the brevity of the marriage
a spouse wasted the property of a spouse
a spouse acted in bad faith

In other words, if the court considers that an equal partition of the family patrimony may not be fair or it does not make sense due to the short duration of the marriage, the court may order that each party remain the sole and absolute owner of his or her property.

This is a very exceptional measure and the courts do not grant this easily.

There must be a serious justification as to why the court should award an exception to the rule of the equal partition of the family patrimony.

Takeaways

In this article, we looked at the concept of family patrimony under Quebec laws.

The family patrimony is defined under the Civil Code of Quebec whereby the law designates specific assets and imposes an equal partition of those assets between the spouses regardless of ownership.

Generally speaking, the following assets form the family patrimony:

Family residence
Furniture in the family residence
Cars and motor vehicles
RRSP
Pension plans

The family patrimony is established upon the date of marriage until the date a spouse files for a divorce application in court.

In some cases, the end date of the family patrimony can be the separation date of the spouses as well.

If a married couple decides to get a divorce, the law requires that the net value of the family patrimony be divided between them equally.

To get the net value of the family patrimony, we add up the value of the assets and deduct the total liabilities to get the net value.

Some assets, such as those acquired via gift or inheritance, can be deducted from the net value of the family patrimony.

Each spouse will then be entitled to half of the net value.

In some exceptional cases, the court can consider making an exception to the rule of the equal partition particularly if there may be an injustice, due to a spouse’s bad faith or the short duration of the marriage.

At the end of the day, if you have important assets and you want to make sure you properly calculate your legal entitlement in the family patrimony, you should consult a family lawyer to advise you in this regard.

We hope this article was useful in helping you better understand how family patrimony assets are divided.