In British Columbia, property division resulting from a divorce or separation is governed by the Family Law Act (“FLA”). The law distinguishes between family property, which is subject to division, and excluded property, which will typically remain with the original owner. Knowing the distinction between property types when going through a separation is helpful and could help make the separation process a little easier to navigate.
Family Property
Family Property generally includes all assets owned or purchased by either spouse during the relationship. This includes property in only one party’s name.
The FLA defines Family Property as:
Family property
84 (1)Subject to section 85 [excluded property], family property is all real property and personal property as follows:
(a)on the date the spouses separate,
(i)property that is owned by at least one spouse, or
(ii)a beneficial interest of at least one spouse in property;
(b)after separation,
(i)property acquired by at least one spouse if the property is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either, or
(ii)a beneficial interest acquired by at least one spouse in property if the beneficial interest is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either.
(2)Without limiting subsection (1), family property includes the following:
(a)a share or an interest in a corporation;
(b)an interest in a partnership, an association, an organization, a business or a venture;
(c)property owing to a spouse
(i)as a refund, including an income tax refund, or
(ii)in return for the provision of a good or service;
(d)money of a spouse in an account with a financial institution;
(e)a spouse’s entitlement under an annuity, a pension plan, a retirement savings plan or an income plan;
(f)property, other than property to which subsection (3) applies, that a spouse disposes of after the relationship between the spouses began, but over which the spouse retains authority, to be exercised alone or with another person, to require its return or to direct its use or further disposition in any way;
(g)the amount by which the value of excluded property has increased since the later of the date
(i)the relationship between the spouses began, or
(ii)the excluded property was acquired.
Examples of Family Property:
- The Family Home (regardless of who purchased it or who is on title)
- Other Real estate purchased during the relationship,
- Bank accounts, savings and investments
- Pensions, and retirement savings (RRSPs)
- Business interests
- Vehicles and other personal property
- Debt incurred during the relationship (credit cards, mortgage, loans)
Excluded Property
Excluded Property is any property that is not subject to division. If you are claiming property is excluded from division at separation, it is your responsibility to demonstrate that the property should be excluded.
The FLA defines excluded property as:
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).
Examples of Excluded Property
- Assets owned by a spouse before the relationship began
- Inheritances or gifts received by one party (if kept separate)
- Property purchased with excluded property
- Damage awards such as personal injury settlements
- Some Trust Property
Important Considerations
Spouses
The provisions in the FLA that relate to family and excluded property apply to anyone separating that was:
- Legally married (do not have to be married in BC)
- Cohabiting in a marriage like relationship for a continuous period of a minimum of 2 years.
Increase in Value
The value of excluded property at the date the relationship began (whether the date of marriage or the date of cohabitation) remains with the original owner. Any increase (or decrease) in its value during the relationship is considered family property.
Commingling of Assets
Excluded property that is mixed with other assets may lose its excluded status. For example, an inheritance being used to fund renovations to the family home or is deposited into a joint investment account, may no longer be considered excluded property.
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of family law.