What is family property, and what isn’t? How is property divided when a relationship ends?
The basic rule in BC is that all family property is shared equally when spouses separate. Seems straightforward, but in actuality, division of family property is one of the most contentious aspects of BC family law. It can be tricky for spouses to know which assets are “family property” that must be shared, and which assets are excluded from equal division between them.
Let’s look at what is not family property. Here is where it can get even trickier:
Certain types of property are not family property. Property that is not family property is called excluded property. Excluded property is not shared. Excluded property belongs to the spouse who owns it.
The increase in value of a spouse’s excluded property is family property. If a spouse’s excluded property has increased in value after it was received or bought into the relationship, the increase in value must be shared.
BC’s Family Law Act defines what is excluded property. It says that the following is excluded from family property:
property owned by one spouse before the relationship between the spouses began. Often this includes a house bought by one spouse before the relationship commenced.
an inheritance given to one spouse.
gifts given to only one spouse by a third party during the relationship.
a settlement or an award of damages to a spouse as compensation for injury or loss. Often this will include certain types of personal injury damage awards and insurance proceeds.
property held in a discretionary trust for the benefit of a spouse, if the assets held in the trust were contributed by a third party.
any property derived from excluded property.
The spouse who claims that property is excluded property is responsible for proving that the property is excluded property. They have the legal onus of proof.
There is another wrinkle to this issue and that is that it is possible for property to lose its excluded status. This could happen, for example, if excluded property was transferred by one spouse into both spouses’ names or if excluded property is sold and the proceeds are used to buy joint assets or jointly owned property. There are currently 2 differing lines of cases on this issue.
Do you need advice on dividing family property in BC?
Whether you are thinking about separating or have already separated from your spouse, property issues need to be resolved in a timely fashion. You must commence your action within a specified time limit and if you miss that deadline, you are prevented from pursuing your claim and pursuing your legal rights. Keep in mind that the rules in the Family Law Act are the default position. But you and your spouse can agree to something different by negotiating a Separation Agreement.
No matter what family law questions you have or family law issues you might be facing, you are well advised to obtain legal advice from an experienced family law lawyer at the outset to determine your legal rights, legal obligations and legal entitlements. At the family law office of Valerie M. Little, you will get the answers to your family law questions and determine the variety of your options to resolve your family law issues.