Fair Property Division in British Columbia
How to Divide Web Properties: Domains, Social Media Channels, Email Lists, Brand Websites Photo Credit: M. Meyer
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Equal property division is not always “fair”, especially if there is property which should be excluded. Married and Common Law spouses who decide to end their relationship are legally entitled to a division of the family property that they have amassed together during cohabitation. The most important thing to understand about the division of property in BC is that decisions regarding property are very difficult – and often very expensive – to reverse. It’s imperative to get it right the first time when it comes to the division of family assets.
Achieving a fair division of property can be complicated, therefore it is important to receive legal advice early in the process of separation or divorce, in order to ensure you understand and protect your legal rights. Ideally, this advice should be sought even before participating in discussions about ending the relationship.
The lawyers at Fleetwood Family Law are genuinely concerned when people visit our office for their free consultation after making potentially life-altering decisions. Many divorce lawyers in Surrey give free consultations, so unless one partner is fleeing a violent situation and needs to act quickly to protect themselves or the child, there’s little reason to act blindly. Professional advice is available to you. Avoid making any rash decisions that will impact your life – and the lives of your children – for years afterward. Even if you and your partner are amicable, make the best decision to speak with an experienced family lawyer before you need one. Do you have excluded property? An equal division may not be a fair division. Your situation is unique; we can let you know your options as they stand, right now, today.
To gain the most value from your free consultation, a lawyer will quickly gain a reasonable understanding of your situation if these documents are made available for review. PDF.
What are the Rules?
For couples who haven’t previously constructed a marriage agreement, or who have substantially disregarded their previous agreements, the rules for property division in B.C apply to both married and common law couples who have been living in a marriage-like relationship for a minimum of 2 years.
To assess what is a fair division of family property, the court will consider 3 important dates:
- the value of family property when the marriage or cohabitation began
- the value of all family property upon separation
- and the value of those entities today
Property in B.C falls under 2 categories:
- Family Property
- Excluded property
The Family Cabin: Excluded Property? Photo Credit: O. Collet
Who will get the Family Business in divorce? Photo Credit: K. Papp
What is Family Property?
Family Property is defined as all real or personal property which, at the date of separation, is owned by either spouse, or in which either spouse has a beneficial interest.
This means that both spouses will be entitled to an equal half-interest in family property. It is irrelevant whose name the property is under and whether one spouse has contributed more or less than the other.
However, there are some exceptions to this and any property that is not defined as family property is considered to be excluded property.
Generally, each spouse will have the right to an undivided half interest in all family property.
However, it should be noted that in some cases the court may order an unequal division of family property.
Some examples of Family Property include:
- A share or interest in a corporation;
- An interest in a partnership, association, organization, business, or a venture;
- Property owing to a spouse such as a refund, including an income tax refund;
- Money of a spouse in an account with a financial institution;
- Annuities, pension plan, retirement savings plan or an income plan;
- Increases in value of excluded property from the date the relationship between spouses began or the date excluded property was acquired.
How is Family Property Valued?
Unless there is a prior agreement in place, the value of family property is based on fair market value. Although the cost can be substantial, it is not advisable for couples to forego appraisal of family property when contemplating division and drafting their separation agreement. If negotiations drag on, it’s wise to consider having the evaluation updated.
What is Excluded Property?
Excluded Property is that which will not be divided equally under the BC Family Law Act,
- Property acquired after the date of separation
- Property a spouse acquired prior to the relationship
- An inheritance, held separately from family finances
- Gifts to a spouse from a third party;
- Settlement or an award of damages to a spouse as compensation for injury or loss, unless the settlement represents compensation for a loss to both spouses or lost income of a spouse;
- Property held in trust for a spouse;
It should be noted that a spouse who claims that property is excluded property is responsible for demonstrating that the property is excluded property; and
It should be noted that, unless there is a prior agreement, any increase in value of excluded property since the date of marriage will be considered family property by the court. This means that the increase is equally divisible between the parties. Rapidly escalating real estate prices mean gains can equal or even outweigh the original principal investment.
What about our Boat and Motorhome? Photo Credit: J. Such
What happens during divorce if one spouse bought Bitcoin? Photo Credit: executium
What if I Transfer Excluded Property to my Spouse?
Spouses need to be careful with what they do with excluded property. If excluded property is transferred to the other spouse’s name, it may lose its status as excluded property and become family property.
In F. (V.J.) v. W. (S.K.), 2016 BCCA 186, the husband had received an inheritance of $2 million which he used to buy real property. He registered the property solely in his wife’s name. When the parties separated, the wife argued that the $2 million
inheritance had lost its excluded status. The husband argued that the $2 million was still excluded property as it could be traced to the inheritance. The court held that the husband had intended to gift the inherited funds to his wife when they were invested in real property held solely in her name.
What is Family Debt?
Family debt includes all financial obligations which have been incurred by a spouse during the beginning of the relationship between the spouses and ending on the day the spouses separate. For example, if a spouse borrows money on a line of credit, irrespective of whether the line of credit is in a spouse’s sole name, or the joint names of both spouses, both will be responsible for the debt incurred and the amount owing at the debt of separation.
With regard to Family Debt, it should be noted that
- If debt is incurred after the spouses separate, it may still be considered family debt if it is incurred for the purpose of maintaining family property.
- The party alleging the existence of debt bears the onus of establishing it.
- Family debt addressed upon separation is not an invitation for the parties to review every financial transaction that occurred during the marriage.
- Spouses may be held to agreements they made to repay debt during the relationship.
When will the Court Make an Order for Unequal Division of Family Property or Family Debt?
In situations where it would be significantly unfair to divide family property or family debt equally, the court may make an unequal division of family property or debt. Sometimes “equal” is simply not fair.
When determining if unequal division would be more appropriate, the court may consider the following factors:
- the duration of the relationship between the spouses;
- any agreements between the spouses;
- a spouse’s contribution to the career or career potential of the other spouse;
- whether the family debt was incurred in the normal course of the relationship between the spouses; and
- if the family debt exceeds the value of the family property
- each spouse’s ability to pay a share of the family debt
…these are just a few of the many factors.
Always remember that division of family property and debt can be a very complicated area with long-lasting consequences that are sometimes expensive – and therefore potentially impossible – to reverse when ill-informed decisions are made early in the process.
Your case is unique; no amount of research will be a replacement for the considered opinion of an experienced, seasoned legal professional who can dig into the facts of your matter and apply the most current law.
Since there are many complexities to consider, when you have your free consultation try to bring as many of these listed documents as possible.
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