Who Keeps the China? An Overview of Property Division Under the Family Law Act
If you are in the midst of separating from your spouse you may be wondering how your family property and debt will be divided. Under BC law, the basic rule of thumb is: You keep what you bring into the relationship, and you split what you acquired during it.
When separating, spouses are entitled to equally share most “family property.” “Family property” includes assets owned by either spouse or in which a spouse has a beneficial interest, as well as debts and financial obligations incurred by either spouse during cohabitation. The value of family assets is set it as “fair market value,” or what a reasonable buyer would pay for the item. The valuation date for the asset will be the trial date unless the parties agree otherwise.
Separated spouses must be aware of important limitation dates to bring on an application for property division. Married spouses must bring a claim within two years of the date their divorce is granted and unmarried spouses must bring their claim within two years of the date of their separation. The running of time will be suspended if the parties are engaged in negotiations using a family dispute resolution professional.
Despite the general rule, “You keep what you bring in and you split what you acquire during the relationship,” some property, even if acquired during cohabitation, will be excluded from division including:
- gifts to one spouse,
- certain court ordered awards,
- insurance payments, and
- property held in a trust that was contributed by someone else
If you want to claim an asset you own is excluded you must be able to produce documents to show it existed and what its value was at the start of cohabitation. If you sold an excluded asset at some point during cohabitation and bought another one using the funds, the new asset will also be excluded. A word of caution that this can be somewhat challenging to prove since you must be able to track it throughout the relationship.
Under BC law, there is another complicating factor that separating spouses must understand: if an excluded asset appreciated in value during the relationship, the growth in that asset will be shared with your spouse upon separation. A very simple example of this principle at work is a house purchased by one spouse for $100,000 prior to cohabitation which appreciates in value to $300,000 at the end of the relationship. The spouse who purchased the home would be entitled to exclusion for only the $100,000 pre-cohabitation value and would need to share the $200,000 growth in the asset.
The general rule for property division under BC law is “You keep what you bring in and you split what you acquire during the relationship.” However there are some fairly complicated exceptions to the general rule, which separating spouses should discuss with a skilled family law lawyer.