Basic Principles of Dividing Property When Getting a Divorce in BC

Divorce means property division including land and personal property. This article sets out the basic principles of property division in BC.


Dividing house and property in divorce

 

The law regarding the division of property following a divorce differs from province to province.  However, most matrimonial property legislation recognizes that one spouse often carries the primary responsibility for work in the home and child-care.[1]  At the end of the relationship that spouse would be at a disadvantage if he or she were not entitled to share in the property accumulated by the partner.[2]  In BC, the Family Relations Act requires each spouse to receive a “one-half interest” in all property classified as a “family asset.”[3]

What is a Family Asset?

According to s. 58 of the FRA, a family asset is property owned by one or both spouses and ordinarily used by a spouse or a minor child of either spouse for a family purpose.[4]  The important factor is how the property is used.  It does not matter who brought the property into the marriage, or how it was acquired.  Examples of family assets are cars, boats, televisions and the family home.  Bank accounts will be included as family assets so long as they are “ordinarily used for family purposes.”[5]  Although the manner in which a particular asset was acquired is not important in determining whether it is a family asset, personal property gifts such as jewelry are often excluded.

For example, if George’s great uncle Larry leaves him a Rolex watch in his will that George only wears on special occasions, it is unlikely this would be included as a family asset since no one else uses the item.  Likewise, inheritances are also generally excluded, unless they have specifically been used for a family purpose.  For example, if George’s uncle also left him an inheritance that he used to purchase a cottage that the family visited for a month every summer, this property would be considered a family asset.  If however, George kept the inheritance in a separate bank account that was never used for family purposes, it is more likely to be excluded.

Are pensions and businesses considered family assets?

The FRA specifically includes pensions, annuities, and home ownership or retirement savings plans as family assets.[6]  The Act also includes shares in a company if the company owns property that is ordinarily used for the benefit of the family.  However, as the Canadian Bar Association notes, these can be very complicated determinations and it is best to speak with a lawyer if you are concerned about the division of property owned by a company or a pension other than CPP.[7]

What if the division is not fair?

Although there is a strong presumption in favour of dividing family assets equally, section 65 of the FRA gives the court the power to change the distribution if it would be “unfair.”   Note that the equal partnership model may not be appropriate in situations where the parties contributed unequal effort into the relationship or many of the assets were accumulated before the marriage took place.

Consider the following example:

Becky and Bill were married for a year and a half.  Becky brought a family cottage in the Cowichan Valley worth $500,000 into the marriage.  However, she and Bill only visited it once for two weeks.  Would it be fair for Bill to receive half of this property? Perhaps not.

Generally, the court will consider the following factors in determining whether the apportionment of property is fair:

  • The duration of the marriage
  • The duration of the period of time they have lived separate and apart
  • The date when the property in question was acquired or disposed of
  • Whether the property in question was an inheritance or gift specifically to one party
  • The needs of each spouse
  • Other circumstances relating to the acquisition, preservation, maintenance, improvements or use of property, or liabilities of a spouse.[8]

In these situations, a court has the ability to declare the ownership of a specific asset to one party.  It may require compensation to be paid to one party if the other retains the item.  The court may also order the property to be sold, divided, held in trust, or transferred to another for the benefit of a child.[9]

What if my spouse tries to prevent me from acquiring the property?

If a court is concerned that a party may attempt to hide or sell property in anticipation that it may be divided as a family asset an interim order may be made that prevents a party from disposing of property before it is divided.[10]

How do I collect my portion of the property?

There are four events that will trigger the family assets to vest in each spouse:

  • The signing of a separation agreement
  • A court declaration that there is no prospect of reconciliation
  • A divorce order made by a court
  • A declaration that the marriage is null or void[11]

Keep in mind that a triggering event may have various positive and negative consequences.  For example, it may help to protect a spouses interest from third-party creditors or decisions to sell assets as discussed above.  However, when a spouse is asking for a reapportionment of the family assets and the other spouse is looking at bankruptcy or is in danger of dying before the litigation is resolved the triggering event fixes the spouse’s interest in the assets at half, when they otherwise may have received more.

Seeking advice…

If you are considering taking a step that would be considered a triggering event, it is best to speak with a lawyer about the effects this may have on your entitlement to family assets.  Keep in mind that this is a complicated area of law that requires forethought and precision.

 


[1] Freeda M. Steele, “The Ideal Marital Property Regime – What Would it Be?” in Elizabeth Sloss (ed.) Family Law in Canada: New Directions (Canadian Advisory Council on the Status of Women, 1985), 128.
[2] Ibid..
[3] Family Relations Act, RSBC 1996, c. 128, s. 56.
[4] Ibid., s 58.
[5] Ibid., s. 58 (3)(c).
[6] Ibid., s. 58 (3)(d).
[7] Canadian Bar Association, “Dividing Family Assets”. Available at: http://www.cba.org/bc/public_media/family/124.aspx.
[8]Family Relations Act, RSBC 1996, c. 128, s. 65.
[9] Ibid., s. 66.
[10] Ibid., s. 67.
[11] Ibid., s. 56(1).


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