February is a big month for proposals so congratulations if you’ve recently gotten engaged! I remember when I popped the big question… My wife can tell you how poorly I did that! But I’m not here to discuss wedding plans, I want to discuss the two matrimonial regimes in Quebec and how they can affect your finances.
In today’s “Do It Together” post, we’ll take a look at the first one – the default regime in Quebec.
What are marriage or matrimonial regimes?
A matrimonial regime sets the rules for managing property and debts accumulated during marriage and how they will be divided in case of divorce or if one spouse passes away. There are essentially two marriage regimes in Quebec: Partnership of Acquests (the default regime) and Separation as to property. There is actually a third regime, but you have to have married before 1970 for it to apply, so we’ll ignore it for the purpose of these videos. Partnership of Acquests, the default regime, and the most common, applies to all marriages that took place without a marriage contract after July 1, 1970.
While we all hope for the happily ever after, the fact is, people get divorced, choose to end their civil unions or, inevitably, one partner eventually passes away. That leads to the conversation about what happens to your finances, so let’s get started.
Now, before we dive into the specifics of either of the two regimes, it’s important to understand two concepts: Private Property and Family Patrimony.
Private Property is anything each partner brought into the relationship. This could include a house, cars, investments, debts or any other personal property. It can get as specific as a computer that was for the sole use of one partner. Private property remains in the hands of the spouse who brought it into the marriage. Whatever you owned before you married remains yours.
Now, regardless of the regime you marry under, and whether or not you have children, the Family Patrimony rules apply. The matrimonial regime you choose only applies to the assets that are not covered by the Family Patrimony and are not Private Property.
So what is the Family Patrimony? In simple terms, it refers to the family home, or homes, and its furnishings, family use cars and any money saved in a retirement plan during the marriage. The retirement piece is broad. It includes government and company pension plans, RRSPs and any other retirement benefit that accrues during the marriage. For all of these assets, so long as they were acquired during the marriage, they get split 50/50 no matter which spouse paid for them.
A couple of important caveats here:
- If one spouse owns a house (or car) before the marriage, then the value of the house on the marriage day belongs to that spouse. In that case, if the marriage dissolves while they are still living in the same house, only the growth in value of the house during the marriage is split in half. However, if that house is sold and a new one is purchased during the marriage, the entire value of the new house is split 50/50.
- Gifts and inheritances are excluded from the family patrimony. If your parents give you a car, even if it’s for family use, it does not form part of the family patrimony.
The reason for the Family Patrimony is that it guarantees the economic equality of the spouses by giving each a fair share of the family assets. Got all that?
(Created automatically, applies to everyone)
(Created automatically, spouses can choose their regime)
Now, back to the default regime, Partnership of Acquests, and what it means. Any and all assets acquired during the marriage, that don’t fall into the Family Patrimony, and are not gifts or inheritances, are considered to be Acquests. Under the default regime, the value of the acquests is divided 50-50 between the spouses at the end of the marriage. This could include savings and investments outside of retirement plans, rental properties acquired during the marriage, investment income, shares in a business, an art or car collection and plenty of other things.
That pretty much covers it for the Partnership of Acquests matrimonial regime in Quebec. In short, if you didn’t own it before the marriage, or inherit it during the marriage, it’s probably going to be split 50/50 if your marriage falls apart.
My next post will be about the other matrimonial regime, Separation as to property, to find out if it might be more appropriate for your situation.