Unfortunately, the answer to the question of “Who gets what?” upon separation or divorce is not always straightforward. The law with respect to BC property division is complex. There are detailed laws, which have been interpreted and applied in reams of court decisions, governing how property and debt are to be divided when spouses separate or divorce. The goal of this post is to shed some light on the ins and outs of the BC property division regime.
To whom does the BC property division regime apply? The laws of property division BC apply to both married spouses and common-law partners who meet the definition of a “spouse” under the Family Law Act. If a person does not qualify as a spouse, they may still have a claim to property, but the laws that apply are different. The general rule of property division BC The general rule of BC property division that applies to spouses is “equal entitlement and responsibility” as set out in s. 81 of the Family Law Act: 81 Subject to an agreement or order that provides otherwise and except as set out in this Part and Part 6 undefined, (a) spouses are both entitled to family property and responsible for family debt, regardless of their respective use or contribution, and (b) on separation, each spouse has a right to an undivided half interest in all family property as a tenant in common, and is equally responsible for family debt. What that means is that when spouses separate, all family property and family debt must be divided equally, unless the spouses have made a different agreement. In other words, the potential options are: 1. If the spouses entered into a valid and enforceable prenuptial agreement, cohabitation agreement, or marriage contract that addresses how property and debt are to be divided upon breakdown of the relationship, that will apply. 2. If at the end of the relationship, the spouses are able to negotiate a separation agreement that deals with division of property and debt, that will govern. 3. If there is no previous agreement and the spouses are unable to negotiate a separation agreement at the end of the relationship, it will be necessary to commence legal proceedings seeking an order of the court for division of property and debt. Property division BC: What is “family property” and “family debt”? Family property is everything the spouses own and owe on the date of separation, regardless of whose name the family property is in. That includes all real property such as the family home, cottages, and investment properties. It also includes the contents of the home and cottage, vehicles and boats, bank accounts, RRSPs, pensions, insurance policies, investments, shares or interests in corporations, and certain types of property held in trust. Also, the increase in value in what is known in family law as “excluded property” (discussed below) is considered family property and the general rule is that the increase in value is divided equally (unless the spouses agree otherwise or the court makes an order for unequal division of property, which is discussed below). Debts that are considered family debt and thus subject to the BC property division rules are any financial obligations incurred by either spouse during the relationship (or after separation if incurred for the purpose of maintaining family property). Family debt can include mortgages, lines of credit, credit cards, and loans. As with property, debt can be family debt even if it is in the name of only one spouse. Property division BC: What is “excluded property”? Some kinds of property are considered “excluded property” and the general rule that property must be divided equally does not apply. Property one spouse owned before the relationship began is excluded property, as are gifts and inheritances given to one spouse during the relationship, some kinds of settlements, damage awards, and insurance proceeds, and certain trust property. The spouse claiming that property is excluded must prove that the property is excluded property. It is important to bear in mind, however, that if the value of excluded property increased during the relationship, that increase in value is still considered family property and is divided equally. Unequal Property Division in BC? As discussed above, all family property and debt are shared equally when spouses separate, unless the spouses have a valid agreement that says otherwise. The courts can also divide family property or debt unequally if would be “significantly unfair” to divide it equally. The determination of what would be “significantly unfair” is based on a number of factors which are set out in s. 95 of the Family Law Act, and include the length of the relationship and a spouse's contribution to the career or career potential of the other spouse. Need advice with respect to property division BC? BC property division rules can be complicated. Call 1-855-852-5100 today to schedule a free initial consultation with one of the experienced family lawyers at Bronson Jones & Company LLP. We can inform you of your legal rights and responsibilities, give you clear legal advice on how family property and family debt should be divided based on your circumstances, and help you develop a strategy for obtaining successful resolution of your family law claims.