The institution of British Columbia’s Family Law Act changed how the courts treat marital property division.
Now spouses who live together for more than two years, regardless if they are legally married or not, are considered to have equal ownership of all family property, including real estate, investments, and other assets.
If the relationship ends, each spouse is entitled to 50% of the family property—and responsible for 50% of any family debt.
The experienced attorneys at Spectrum Family Law have known from the start that this 50/50 division of martial property is not fair or feasible for many of our clients.
Instead, we work within the law to tailor property division agreements that will ensure an optimum financial future for you and your family.
What is property division in BC?
If you live in Vancouver and have been married or in a marriage-like relationship, all the assets that became part of your household within the duration of the marriage would be considered family property, or marital property.
This includes the house that you and your partner bought, as well as any other real estate or household purchases, investments, and pensions.
It doesn’t matter if one of you contributed more money—or even all the money. Since both partners made contributions to the household, the law considers that each deserves the same portion of the marital property when the relationship is over.
This is a great policy, theoretically, but in real life it puts many of our clients at a significant disadvantage. You have the right to dispute the court’s recommendation, but it’s up to you to demonstrate why a 50/50 split would be unfair.
We use our knowledge of BC divorce law to make sure all our clients get a property division agreement that allows them to retain the maximum proportion of assets allowed—and protects them from unnecessary debt payments.
Learn More → Grounds for Divorce in BC
What is excluded property?
BC law does not consider property that you owned before your marriage, or some gifts, inheritances, or other awards that you acquired during your marriage, to be family property. This includes:
- Property or assets the spouse acquired before the relationship
- Gifts (from someone other than your partner)
- Court awards
- Injury or damages settlement
- Money received as insurance beneficiary
- Assets held in discretionary trust
These assets are defined as excluded property under the Family Law Act as long as the other spouse had no financial involvement. For instance, if one spouse receives a settlement after being injured in an accident, that money is excluded property.
If both spouses received compensation for losses after that accident, the amount would be defined as family property.
Equal Division of Vancouver Family Property and Debt in BC
The Family Law Act was the BC government’s attempt to simplify decisions regarding marital property division following a separation or divorce.
Instead of trying to calculate the sum of the mortgage payments one spouse made versus the worth of the unpaid childcare and household maintenance performed by the other spouse, the court now assumes that both spouses made equal contributions to the relationship and household, in good faith, and that both enjoyed the benefits. Therefore, both are entitled to an equal portion of the marital property after the relationship ends.
Unequal Division of Vancouver Family Property and Debt
The court realizes that trying to implement a “one size fits all” policy across a widely divergent set of circumstances does not always produce a fair and just outcome, so it makes allowances in situations where an equal marital property division is deemed to be “significantly unfair.”
In reviewing claims of unfair marital property division, judges typically consider the following:
EACH SPOUSE’S INVESTMENT IN THE RELATIONSHIP
How long was the marriage or relationship? Do they have joint ownership of their marital property? Did one spouse sacrifice educational or career opportunities for the success of the other spouse’s career? Does either spouse have excluded property? Did one spouse own the marital property before the relationship began?
GOOD FAITH BEHAVIOUR
What agreements about marital property division did the spouses make? Did either spouse intentionally devalue family property after the separation to reduce the other spouse’s potential award? Does either spouse have significant personal debt beyond mortgages and other normative shared debt?
RELATIVE FINANCIAL STATUS OF EACH SPOUSE
Who will be responsible for primary care of the children? Can both spouses afford to repay half of the family debts incurred within the duration of the marriage, even with a 50/50 marital property division? Is either spouse facing a tax liability or other credit problem?
What happens to property you owned before you got together?
Excluded property does not have to be shared after the separation. However, if any of these assets increased in value during the relationship—and hopefully they did— the law requires you to split this gain with your partner.
Suppose you receive a large inheritance from your parents, including their house, investments, and bank account. As long as you are the sole recipient of this property, and you haven’t put your spouse’s name on the title, you do not have to split the principal amount after separation. However, your spouse is entitled to half of any appreciation that occurred within the duration of your relationship.
It is not always easy to draw the line between excluded and family property. For instance, if you used your inheritance to buy a house and put both of your names on title, the status would change from excluded to family property, and would become subject to a 50/50 division.
What happens to debts after you separate?
All too often, we end up counseling clients who are stunned when they find out that they are financially responsible for debts their spouse accumulated over the course of the relationship—even though the relationship has ended.
Just as Canadian law gives both partners equal ownership of family property, they give both partners equal responsibility for family debt.
The bulk of family debt is usually tied to a mortgage, but it can also include:
- Credit card charges
- Bank lines of credit
- Income tax owed
- Bank loans for repairs
Does this mean you could be held responsible for your spouse’s reckless spending that you weren’t aware of? Theoretically, yes, especially any loans that went towards maintenance or repair of the family property where you both lived. This includes loans taken out after you separated.
Family debt in British Columbia has been at a record high and determining how these debts should be split after a separation can be complex and painful. Requiring that both spouses take equal responsibility for repaying family debt may not be feasible in all cases, and so the court has the option of making an unequal division order.
The spousal support attorneys at Spectrum Family Law will evaluate your financial situation thoroughly so we can negotiate a debt repayment agreement that is reasonable and fair.
Sole occupation and sale of the matrimonial home in BC
Who gets the house? This is often one of the most contentious decisions that couples who have agreed to separate must make. If they can’t come to an agreement among themselves, either spouse can make an application for sole occupancy.
If there is evidence that the presence of one of the spouses would cause physical or emotional harm to the other spouse or their children, the court will grant sole occupancy since protecting the wellbeing of minor children is always a priority. However, most situations are not this clear-cut. The court will then consider other factors—who is doing the bulk of the childcare, whose name is on the title, who is better equipped to find new accommodations.
Under the BC Family Law Act, the court has the power to require that the spouses sell the family residence if this will:
- Resolve debts
- Discourage a reapportionment claim
- Encourage a separation settlement
Spectrum Family Law strives to find strategic solutions that will fulfill your short- and long-term financial needs and protect your legal rights. Change is never painless, but we do our best to negotiate effective resolutions that give our clients a chance to move on with their lives.
We also have a dedicated intake form to help you get the ball rolling. Our intake team will review your specific case and advise you on the next steps to take as well as what to expect moving forward.
Our Vancouver office is open 8:30 a.m.—4:30 p.m., Mon—Fri.
Kasia was born and raised in Vancouver, British Columbia, where she completed her Bachelor’s degree at the University of British Columbia. She went on to obtain her Juris Doctorate with Honours from Bond University in Australia.