Under British Columbia’s Family Law Act, the rule of thumb is that all ‘family property’ will be divided equally between spouses when they separate. There are obvious exceptions to this rule, which will be covered in a future blog, but that does beg the question was is ‘family property? The easiest way to answer that is to discuss what IS NOT included as family property for the purposes of property division.
The Family Law Act specifically sets out what property is ‘excluded’ from family property at s. 85.
| Excluded property
85 (1)The following is excluded from family property: (a)property acquired by a spouse before the relationship between the spouses began; (b)inheritances to a spouse; (b.1)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). (2)A spouse claiming that property is excluded property is responsible for demonstrating that the property is excluded property.
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Section 85 is saying is that any property that you owned prior to becoming a ‘spouse’ (either getting married or living in a marriage like relationship for 2 years) is not considered family property and would not be split between you and your spouse at separation. If you owned a home prior to the relationship, that home could be considered ‘excluded property’ and safe from division.
It is important to note, however, that the Act does not exclude the growth of any excluded property. The home that you brought into the relationship may be protected, but only at the value it had at the time your relationship started. Any growth in that value is family property that must be shared. That also applies to assets like inheritances received during the relationship.
Further, some property attained during the course of a relationship is also protected, including inheritances, gifts and some settlements.
What is and isn’t excluded property is still evolving. What if you sell your Coquitlam home you brought into the relationship to buy a home for you and your partner? Does the value of the original home remain ‘excluded’? While the Family Law Act has tried to simplify property division at separation, the court continues to look at factors like the intention of the parties when determining what is excluded property and what is not.
It’s important to know your rights when it comes to your property. Contact DBM Law if you have any questions.