In BC, the Family Law Act governs property division between separating spouses. Further, the rules about the division of Family Property apply to both married couples and unmarried couples who have been living together in a marriage-like relationship for at least two years. People who lived together for less than two years are not spouses for the purpose of property and debt division under the Family Law Act. This is true whether a couple has had a child together or not. Family Property is everything you or your spouse own separately or together at the date of separation. But it doesn’t include Excluded Property (more on this below). Let our South Surrey family lawyers at Pier Law & Mediation help you settle your Family Property issues upon separation.

Both you and your spouse are required to disclose all assets and debts owned by both or either of you. Examples of financial documentation that are typically provided to lawyers and exchanged between spouses include:

• T1 General Tax Returns
• Bank statements for all chequing and savings accounts
• Statements for all investment accounts, such as RRSPs and RESPs
• Loan documents
• Insurance policies
• Annual pension plan statements
• Market valuation report assessing the value of the matrimonial home

Everyone’s situation is unique. It may be that certain documentation listed above is not relevant to your situation so is therefore not required to be disclosed. On the flip side, your circumstances may call for additional or different documentation to be exchanged in a divorce proceeding. For example, when spouses own a business individually or together, much more documentation may need to be exchanged.

The main point of document disclosure is that you and your spouse have all the information you need in order to make an informed decision about your legal options.

Property owned by one or both spouses will generally fall into one of two categories under the Family Law Act: Family Property or Excluded Property. Both of these are defined below.

Two general rules of thumb apply to property division:

1. Family Property is divided between spouses equally
2. Excluded Property stays with the owner spouse as his or her sole property

While there can be exceptions to these rules, they are a good starting point when considering entitlement to property division upon separation in BC. The presumption of equal entitlement to Family Property is set out at Section 81 of the Family Law Act.

The first question to consider when figuring how and what property is divided upon separation of two spouses is: What is Family Property? The Family Law Act defines Family Property at Section 84. Section 84 specifically addresses property that is held both at the time of separation and property acquired after separation.

Accordingly, to put the matter simply and in general terms, Family Property includes:

1. Any property that is owned by one or both spouses at the time of separation, or
2. Property acquired by one or both spouses after separation provided that the property can be traced to property owned by one or both spouses during their relationship.

Section 84(2) sets out a non-exhaustive list of assets that are Family Property, provided these assets meet the requirements set out in Section 84(1). Some examples of Family Property set out in this list include:

• A share or an interest in a corporation
• Income tax refunds of either spouse
• Various parts, forms and/or variations of trust interests
• A spouse’s entitlement under a retirement savings plan
• A spouse’s entitlement under a pension plan

Gone are the days when lawyers and their clients would undergo a thorough analysis of the kind and extent of contributions each spouse made to a particular asset or piece of property. It does not matter whether a spouse contributed to an asset or even knew about its existence for an asset to be characterized as Family Property.

Now that we know what Family Property is, the second question to consider is: What is Excluded Property?

The Family Law Act Section 85 defines Excluded Property as:
(a)property acquired by a spouse before the relationship between the spouses began;
(b)inheritances to a spouse;
     (b1) gifts to a spouse from a third party;
(c)a settlement or an award of damages to a spouse as compensation for injury or loss, unless the settlement or award represents compensation for
      i. loss to both spouses, or
      ii. lost income of a spouse;
(d)money paid or payable under an insurance policy, other than a policy respecting property, except any portion that represents compensation for
    i, loss to both spouses, or
    ii. lost income of a spouse;
(e)property referred to in any of paragraphs (a) to (d) that is held in trust for the benefit of a spouse;
(f)a spouse’s beneficial interest in property held in a discretionary trust
    i. to which the spouse did not contribute, and
    ii. that is settled by a person other than the spouse;
(g)property derived from property or the disposition of property referred to in any of paragraphs (a) to (f).

As long as an asset fits into one of these exceptions set out in Section 85 of the Family Law Act as Excluded Property, then even if you own that property during your relationship or marriage, it is not Family Property. In contrast, that asset is yours to keep as Excluded Property.

1. Increases in Value of Excluded Property – Our Surrey Family Lawyers Explain this Stipulation about Family Property
   If a spouse holds an asset as Excluded Property during the relationship, but that asset increases in value over the course of the relationship, any increase in value of the Excluded Property is Family Property. This means that while the original value of the asset at the time the spouses moved in together remains Excluded Property, the increase in value is Family Property and is therefore shared equally between the spouses.
   
   
2. Tracing Excluded Property
   Further, Excluded Property can be traced into another form of property and retain its characterization as Excluded Property. So, for example, if a spouse uses money from an inheritance (Excluded Property) and uses those funds to purchase outright a new vehicle, that vehicle will also be Excluded Property. 

The Court may order that Family Property or family debt be divided unequally if an equal division would be significantly unfair. When determining whether or not to divide property or debt unequally, the following are some of the factors that may be considered when assessing significant unfairness:

• The duration of the relationship
• A spouse’s contribution to the career or career potential of the other spouse
• Whether one spouse, after separation, caused a significant decrease or increase in the value of Family Property, beyond market trends
• When a spouse disposes of Family Property with a view to adversely impacting or defeating the other spouse’s interest in that property
  
  In the same vein, a court may decide to divide one spouse’s Excluded Property if it would be significantly unfair not to do so.

Dividing property and debts after separation can be difficult and thorny: nuances may exist that you did not expect. This is especially true when issues such as excluded property, business assets, and complex investment assets come into play. The South Surrey family lawyers at Pier Law & Mediation have years of experience helping clients in South Surrey, White Rock and through-out BC divide their Family Property through effective negotiation and when necessary, litigation.