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6.11 Property Division

Resource:

After the end of a relationship, property and debts have to be divided in a way that is fair to both spouses. In general, spouses will share any property gained during the relationship equally, but not any property they brought into the relationship. 

According to the Family Law Act, each spouse is: 

  • entitled to keep his or her “excluded property”; 
  • entitled to one-half of the “family property” and half of the increase in the excluded property; and 
  • liable for one-half of the “family debt”.   

 

What is “family property”?  

Law Guide:

Family Law Act : Part 5 Property

Family property is all of the property owned by either or both spouses as of the date of separation, minus any excluded property.

Family property can include:  

  • The family home
  • Household items
  • RRSPs
  • Investments
  • Bank accounts
  • Insurance policies
  • Pensions
  • An interest in a business
  • Vehicles

Each spouse is presumed to have a one-half interest in all family property, regardless of his or her use of, or contribution, to that property.  In other words if you and your spouse bought a car while you were together, you would be entitled to 50% of it, no matter how much money you put into it or if you are the one that usually uses it.

Family property can be divided differently if it would be “significantly unfair” for it to be shared equally.

 

What is “excluded property”?  

Excluded property is the property a spouse already owned before the relationship began, as well as certain kinds of property received during the relationship. But, an increase in the value of any excluded property after the relationship began is considered family property and must be divided.  

Other excluded property includes:

  • gifts,
  • inheritances,
  • certain court awards and settlements,
  • certain insurance payments, and
  • property held in trust, providing that the spouse didn't put the property into the trust.

Caution: 

If a spouse makes a gift of excluded property to the other spouse, it becomes family property. For example, if a spouse uses an inheritance to buy a house and puts the house in the name of the other spouse, the exclusion for the inheritance will be lost. The law is not clear about what happens if a spouse who puts an inheritance or other excluded property into a house held in joint names. If you are thinking of using excluded property in a way that might be considered a gift to the other spouse, talk to a lawyer.

 

Debt 

What is “family debt”?

Family debt is all the debt incurred by either or both spouses during their relationship. Spouses are presumed to have a one-half responsibility for family debt, regardless of their contribution to or the use of that debt. 

Dividing family property or family debt unequally  

While the presumption of an equal division of family property and debt is strong, a court will order a division that is unequal if equal division would be “significantly unfair”. Some of the factors the court will consider when determining whether an equal division would be significantly unfair include: the length of the spouses’ relationship; if family debt is worth more than the family property; and each spouse's ability to pay a share of the debt. 

The Time Limit 

The time limit to settle family property or debt disputes is two years, meaning that spouses must apply to divide property and/or debt within two years after they separate (if they are common law) or divorce (if they are married). 

Attention:

If you are worried that your ex-spouse will sell your property without your consent, you can prevent this from happening by filing an entry under the Land (Spouse Protection) Act with the Land Title and Survey Authority, or by filing a Certificate of Pending Litigation under the Land Title Act with the Land Title and Survey Authority. You can also make an interim application for a court order, preserving your family property. To learn more about these applications see Chapter 8.3.

 

KEY LEGAL FACTS ABOUT PROPERTY DIVISION

  • Family property and debt are divided 50/50 between spouses unless that would be significantly unfair
  • A spouse is entitled to 50% of the increase in value of excluded property
  • You must bring a claim within 2 years of your divorce (if married ) or separation (if common law)

Take a few minutes to test your knowledge about property rights by completing the Property & Debt Division Exercise

Now that you are more familiar with the laws related to the division of your property and debt. Fill in the Property Worksheet with your own information.