The information below is general in nature and not intended to be a substitute for legal advice. If you are concerned about the division of property following the breakdown your marriage or marriage-like relationship, please contact our offices. Do not sign a separation agreement without independent legal advice.
The New Family Law White Paper on Family Relations Act Reform 2010 provides radical changes to how property is divided in BC as follows:
Enact major reforms to the law’s property division regime, that would:
1. Extend it to common-law spouses who have lived together for two years in a marriage-like relationship or who are in marriage-like relationship of some permanence and have children together.
2. Exclude certain types of property (e.g. pre-relationship property, gifts, and inheritances) from the pool of family property to be divided 50-50.
3. Limit judicial discretion to reapportion family property or to divide excluded property to circumstances where it would be clearly unfair not to do so.
4. Provide that debts are subject to equal division.
5. Set as defaults: the date of separation as the triggering event and the date of the court order or agreement as the valuation date.
6. Limit the ability of judges to set aside or change property division agreements.
7. Enable interim orders, including for the distribution of property for the purposes of funding litigation or dispute resolution.
8. Enact conflict of laws provisions to address property outside of British Columbia.
Depending on your circumstances these changes may be a benefit or a detriment and you need to obtain legal advice now to plan properly to ensure your rights are protected.
Property division can be accomplished by agreement or by order of the Court. Only the Supreme Court has the jurisdiction to deal with the division of family property.
During a marriage or common law relationship, the law recognizes the rights of the spouse(s) who hold(s) legal title to the property. Upon the breakdown of a marriage (but not a common law relationship), Part 5 and 6 of the BC Family Relations Act (FRA) comes into play to create family assets, subject to division between the spouses.
Unless a common law couple has made a marriage agreement about how the parties will manage or divide their assets, there is no legislation that applies to the division of their property. Persons leaving a common law relationship may have to prove that the other party has been unjustly enriched before they can obtain a share of assets owned by the other party. See Rights of Common Law Couples (opposite-sex and same-sex).
For married couples, the FRA property division provisions take effect when one of four a triggering events has occurred:
- A signed separation agreement
- A judicial declaration that there is no prospect of reconciliation,
- An order of dissolving the marriage or judicial separation, or
- An order declaring the marriage null and void.
Once one of these events has occurred, there is a presumption that all “family assets” are to be divided equally between the parties.
A “family asset” is defined as one that is owned by one or both spouses and ordinarily used by a spouse (or a minor child of either spouse) for a family purpose.
Ordinary use means in the course of a customary mode of life of the family rather than a special, occasional or casual use. An occasional or incidental use for a family purpose does not “taint” an asset and turn it into a family asset. However, occasional use coupled with an intention to use the asset for a future family purpose may lead to the finding that the asset is a family asset.
The definition of family asset extends to:
- Savings accounts if the money is ordinarily used for a family purpose,
- The right of a spouse under an annuity, pension, homeownership or RSP,
- A right, share or interest in a venture if the other spouse contributed money or other value to the venture,
- Corporate shares or interest in a trust if the corporation or trust owns property that would be a family asset if owned by a spouse.
- Property over which one spouse has a power of appointment in favour of themselves, the power to use, the power to dispose of, or the power to revoke an earlier disposition of the asset if the property would be a family asset if owned by a spouse.
Property owned by one spouse will not be a family asset if the asset is used primarily for business purposes and the non-owning spouse made no direct or indirect contribution to the acquisition of the property or the operation of the business. An indirect contribution can include the savings achieved through housekeeping or childrearing.
If an equal division of the family assets would be unfair having regard to the factors in s. 65 of the FRA, the Court may reapportion the assets. Section 65 sets out the relevant considerations as follows:
- The duration of the marriage,
- The duration of the period during which the spouses live separate and apart,
- The date when property was aquired and disposed of
- The extend to which property was aquired by one spouse through inheritance or gift,
- The needs of each spouse to become or remain economically self sufficient, and
- Any other circumstances relating to the acquisition, preservation, maintenance, improvement or use of property or the capacity or liabilities of a spouse.
“Any other circumstances” may include:
- Lack of contribution of one spouse in acquiring a family asset,
- Contributions before marriage,
- Whether the asset was improved, preserved or maintained solely through the efforts of one spouse,
- Use or depletion of assets prior to trial,
- Whether one spouse has the responsibility to provide a home for the children of the marriage,
- Whether one spouse has had the use of the family home after separation, and
- A spouse’s physical or mental capacity.
Although division of property and spousal/child support are separate issues and the court should divide property before considering support, the intention and ability of a spouse to pay support may be taken into account in relation to the fairness and reapportionment of assets.
The FRA does not provide for the division or reapportionment of debt, but the liabilities of a spouse may be taken into account in assessing fairness and in reapportionment.
The following factors are not relevant to the fairness of the division of assets:
- The conduct of the spouses
- Contributions to day to day living expenses
- The fact that a spouse has less money on dissolution of the marriage than at the time of marriage
- The fact that there are no children of the marriage
- One spouse’s temporary inability to work
- The actual registered ownership of the family asset.
The division of property can take place by way of the sale of property and division of the proceeds of the sale, transferring the ownership of assets, or by the court ordering one spouse to retain property upon paying compensation to the other spouse.
Non-family assets may be dealt with by the court in a limited way. When the Court determines whether an equal division would be unfair, only family assets may be considered. However, if the Court makes an order reapportioning the division of family assets, it may give effect to the reapportionment by transferring any property from one spouse to the other spouse, even if that property is not considered a family asset.
In the case of pensions, the FRA provides for the deferred sharing of the pension benefits accrued during the marriage; pension benefits are not divided until the parties actually retire.
In the case of RSPs, the Income Tax Act provides for a “rollover” permitting RSPs to be transferred from one spouse to the other without any income tax becoming payable. However, a Court order or written separation agreement is required by Canada Customs and Revenue.
