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{{Dial-A-Law TOC|expanded = family}}This script discusses dividing property and debt between married spouses and unmarried spouses when their relationship breaks down.
{{Dial-A-Law TOC|expanded = family}}This script discusses dividing property and debt between married spouses and unmarried spouses when their relationship breaks down.
This script discusses dividing property and debt between married spouses and unmarried spouses when their relationship breaks down.
When a relationship ends, spouses are presumed to keep property they brought into the relationship and to share in property they acquired during their relationship. The same goes for debt.


==Who is a “spouse”?==
==Understand your legal rights==
Property and debt are divided between spouses under the ''Family Law Act''. The “spouses” who are entitled to apply for an order dividing property and debt are:


*people who are married; and
===The rules around property division apply to “spouses”===
In BC, the ''[http://canlii.ca/t/8q3k Family Law Act]'' deals with the division of property and debt when a couple separates. This law applies to people who are '''spouses'''. A spouse is defined as:
*people who are married, or
*people who have lived together in a “marriage-like relationship” for at least two years.
*people who have lived together in a “marriage-like relationship” for at least two years.


Claims for the division of property and debt must be made within two years of the date married spouses are divorced or their marriage is annulled or, for unmarried spouses, the date of their separation.
Spouses are presumed to keep the property each of them brought into the relationship and to share in the things they acquired during their relationship. The same rules apply about debt. Spouses are presumed to share responsibility for the debts that accumulated during their relationship.


If you don’t qualify as a “spouse”, the laws that apply to your situation are different, and this script does not apply to you. You should refer to script [[Other Relationships: Your Income, Support and Property Rights (Script 148)|148]] on “Other Relationships: Your Income, Support and Property Rights”.
If you don’t qualify as a spouse, the laws that apply to your situation are different. See our information for [[Your Income, Support and Property Rights (Script 148)|couples who are not spouses (no. 148)]].  


==The basic principles of the ''Family Law Act''==
===Each spouse is presumed to keep certain “excluded” property===  
The law about dividing property and debt is contained in the ''Family Law Act''. In general:
Under [https://www.canlii.org/en/bc/laws/stat/sbc-2011-c-25/latest/sbc-2011-c-25.html#sec85_smooth BC law], certain property is defined as “'''excluded property'''”. Property a spouse brought into the relationship is excluded property. So is certain kinds of property a spouse received during the relationship, such as a gift from someone else, an inheritance, or a court award. Property bought with excluded property is excluded property.


*Each spouse is entitled to keep the property they brought into the relationship, plus certain kinds of property received during the relationship, like inheritances and court awards, as his or her “excluded property”. Note, recent court decisions have applied this principle in various ways and at times excluded property has been treated as family property. As a result it is strongly recommended that you consult a family law lawyer to obtain legal advice.  
Excluded property is presumed to remain the property of the spouse who brought it into the relationship or received it. (However, any increase in value of excluded property during the relationship becomes family property and is shared.)


*Each spouse is entitled to one-half of the property bought during their relationship, plus one-half of the increase in value of each other’s excluded property. The property spouses are entitled to share is called “family property”.
{| class="wikitable"
|align="left"|'''Tip'''
Courts have frequently grappled with what property qualifies as excluded property. If you have property that may be excluded property, it is highly advisable to get legal advice from a family law lawyer.
|}


*Each spouse is responsible for one-half of the debt accrued during the relationship, including any debt incurred after separation to maintain family property. The debt spouses are obliged to share is called “family debt”.
===Each spouse is presumed to share equally in “family property”===
All property owned by either or both spouses at the date of separation is '''family property''' unless it is excluded property. Family property is presumed to be '''shared equally''' between the spouses, regardless of their use of or contribution to that property.


==What is “family property”? ==
Family property can include real property, interests in companies or businesses, money a spouse is owed (such as an income tax refund), bank accounts, retirement savings accounts, and pensions. Family property also includes any increase in the value of excluded property during the relationship.  
Family property is all of the property owned by either or both spouses on the date of separation, minus any excluded property. Family property includes: real property; interests in companies, partnerships and businesses; money owed to a spouse; bank accounts, RRSPs and pensions; and, interests in certain kinds of trusts. Family property also includes the amount of the increase in value of any excluded property.


Each spouse is presumed to have a one-half interest in all family property, regardless of their use of or contribution to that property.
Each spouse is presumed to have a one-half interest in all family property, regardless of their use of or contribution to that property.


==What is “excluded property”?==
===Each spouse is presumed to share equally in “family debt”===
Excluded property is the property a spouse brings into a relationship, including some kinds of property received during the relationship. Excluded property received after a relationship starts may include inheritances and gifts from people other than the other spouse; court awards; insurance money; and, interests in certain kinds of trusts. Excluded property also includes property bought with excluded property.
All debt incurred by either or both spouses during their relationship is '''family debt'''. Responsibility for family debt is presumed to be '''shared equally''' between spouses, regardless of their use of or contribution to that debt.


Excluded property is presumed to remain the property of the spouse that owns it. However, recent court decisions have complicated what is considered excluded property and when does excluded property lose its exclusion and become family property. As a result it is strongly recommended that you consult a family law lawyer to obtain legal advice.
Family debt includes debt run up after separation if the debt was incurred to pay for or maintain family property.


==What is “family debt”?==
===There are exceptions to the equal division rule===  
Family debt is all debt run up by either or both spouses during their relationship. Family debt includes debt run up after separation if the debt was incurred to pay for or maintain family property.
Under [https://www.canlii.org/en/bc/laws/stat/sbc-2011-c-25/latest/sbc-2011-c-25.html#sec95_smooth BC law], if it would be '''significantly unfair''' to equally divide family property or family debt, a court may order an unequal division. The presumption of an equal division of family property and family debt is very strong. The unfairness must be "weighty, meaningful or compelling".


Spouses are presumed to have a one-half responsibility for family debt, regardless of their contribution to the debt or the use that was made of it.
In considering whether an equal division would be significantly unfair, a court will look at factors such as:
the length of the spouses’ relationship
*whether the debt was incurred in the normal course of the spouses’ relationship
*if the amount of family debt exceeds the value of family property, the ability of each spouse to pay a share of the family debt  
*whether a spouse, after separation, caused a significant increase or decrease in the value of debt or property
*whether a spouse may have to pay taxes as a result of a transfer of property


==Are RRSPs and pensions family property?==
==Common questions==
Yes. The amount of any RRSPs or pensions that each spouse accumulated during the relationship is family property. There are special rules in the Family Law Act for dividing most kinds of pension plans. There are separate rules for dividing other pensions and Canada Pension Plan credits that are not found in the ''Family Law Act''. A lawyer can help with this.


==Are shares in a company family property?==
===Are RRSPs and pensions family property?===
Yes. A spouse’s shares in a company are family property. This can be a complicated issue and you should speak to a lawyer if you or your spouse has an interest in a company.
Yes. The amount of any Registered Retirement Savings Plans (RRSPs) or pensions that each spouse accumulated during the relationship is family property. There are special rules in the ''Family Law Act'' for dividing most kinds of pension plans. There are separate rules for dividing other pensions and Canada Pension Plan credits that are not found in the ''Family Law Act''. A lawyer can help with this.


==Is an inheritance family property?==
===Are shares in a company family property?===
No. An inheritance that a spouse receives before, during or after a relationship is part of that spouse’s excluded property. However, for inheritances received before separation, the amount the inheritance increased in value during the relationship is family property.
Yes. A spouse’s shares in a company are family property. This can be a complicated issue and it is highly advisable to speak to a lawyer if you or your spouse has an interest in a company.


==What happens if a spouse tries to hide or sell property?==
===Is an inheritance family property?===
The court can prevent the transfer of property to a third person if the court believes that the transfer is being made to limit or interfere with the other spouse’s interest in that property. The court can also reverse a transfer that’s already occurred, whether before or after separation, and make a “compensation order” to repay a spouse for property that was transferred to frustrate the spouse’s interest in that property.
Generally speaking, no. An inheritance that a spouse receives before, during or after a relationship is part of that spouse’s excluded property. In some unique circumstances, an inheritance can lose its excluded status. If an inheritance is in play, it is advisable to get legal advice from a family law lawyer. As well, note that any amount an inheritance increased in value during the relationship is family property.


==Are there any exceptions to the equal division rule?==
===What happens if a spouse tries to hide or sell property?===
Yes. If an equal division of family property or family debt would be significantly unfair, the court can order a division that is unequal. Although the presumption of an equal division of family property and family debt is very strong, the court’s main duty is to ensure that property is divided fairly.  
A court can prevent the transfer of property to a third person if the court believes the transfer is being made to limit or interfere with the other spouse’s interest in the property. The court can also reverse a transfer that’s already occurred, whether before or after separation, and make a “compensation order” to repay a spouse for property transferred to frustrate the spouse’s interest in the property.


==What does the court look at when dividing family property or family debt unequally?==
===Can spouses agree to an unequal division of family property and family debt?===
The factors the court will take into account in determining whether an equal division would be significantly unfair include: the length of the spouses’ relationship; whether debt was incurred in the normal course of the spouses’ relationship and whether the amount of debt exceeds the amount of property; whether a spouse caused a significant increase or decrease in the value of debt or property after separation; and whether taxes must be paid to divide family property between the spouses.
Yes. Spouses can agree to an unequal division of property and debt in a ''separation agreement''' or by a court order called a “'''consent order'''”. Also, they might have made a '''marriage agreement''' when they got married (or cohabitation agreement when they began to live together) sorting out their interests in excluded property or family property.  


==Can spouses agree to an unequal division of family property and family debt?==
Courts respect agreements about property and debt division and will uphold them as long as the agreements are fair. For more on family law agreements, see our information on [[Separation and Separation Agreements (Script 115)|separation agreements (no. 115)]] and [[Marriage Agreements and Cohabitation Agreements (Script 162)|marriage and cohabitation agreements (no. 162)]].
Yes. Spouses can agree to an unequal division of property and debt in a separation agreement or by a court order called a “consent order”. Also, they might have made a marriage or cohabitation agreement sorting out their interests in excluded property or/and family property when they got married or began to live together.  


Courts respect agreements about property and debt division and will uphold them as long as the agreements are fair. For more information on marriage agreements and cohabitation agreements, refer to script [[Marriage Agreements and Cohabitation Agreements (Script 162)|162]] on “Marriage Agreements and Cohabitation Agreements”.
===Can a court divide excluded property?===
Yes, in some cases. The presumption that a spouse should be entitled to keep their excluded property is very strong. But a court can divide excluded property if:
*family property or family debt outside British Columbia cannot be divided, or
*it would be significantly unfair not to divide excluded property, considering the length of the spouses’ relationship and the non-owning spouse’s direct contribution to the excluded property.


==Can the court divide excluded property?==
===Can spouses agree to divide excluded property?===
Yes. Although the presumption that a spouse should be entitled to keep his or her excluded property is very strong, the court can divide excluded property if: family property or family debt outside British Columbia cannot be divided; or if it would be significantly unfair not to divide excluded property considering the length of the spouses’ relationship and the non-owning spouse’s direct contribution to the excluded property.
 
==Can spouses agree to divide excluded property?==
Yes. Spouses can make an agreement at the start, during or end of their relationship that excluded property will be treated like family property and be divided between them.
Yes. Spouses can make an agreement at the start, during or end of their relationship that excluded property will be treated like family property and be divided between them.


==When does each spouse get their share of the family property and become responsible for the family debt?==
===On what date does family property and family debt get divided?===  
On the date the spouses separate, each spouse becomes a one-half owner of all family property as a tenant in common, and each becomes responsible for one-half of the family debt.  
On the date the spouses separate, each spouse becomes a one-half owner of all family property as a tenant-in-common, and each spouse becomes responsible for one-half of the family debt.  


==When do you have to apply for a division of property and debt?==
===Do I need to go to court?===
It is not necessary to start a court case to divide property or debt, and you do not need to get a divorce order first if you’re married. However, if an agreement about dividing property and debt can’t be reached:
It is not necessary to start a court case to divide property or debt, and (if you’re married) you do not need to get a divorce order first. You can make an agreement to divide property and debt.


*married spouses must apply to court for a division of property and debt under the ''Family Law Act'' within two years of the date that court made a divorce order or a declaration that their marriage is a nullity; and
However, if you and your spouse can’t agree on how to divide property and debt, you will need to apply to court for an order dividing property and debt. A claim to divide property and debt must be brought within two years of the date of divorce (for married spouses) or date of separation (for unmarried spouses).
*unmarried spouses must apply to court for a division of property and debt under the act within two years of the date they separated.


==Summary==
==Get help==
When married or unmarried spouses separate, each spouse is entitled to an interest in all family property and becomes responsible for all family debt. Normally the interest in family property is a one-half interest and the liability for family debt is for one-half of that debt; the division of family property and family debt may be unequal if an equal share would be significantly unfair. Each spouse will usually keep his or her excluded property, but will have to share the amount that the excluded property increased in value during their relationship.


Because the division of family property and family debt raises some very complex legal issues, it’s important to get legal advice immediately. With proper advice and help, it’s often possible to settle the division of property and debt without having to go to court.  
===With more information===
The wikibook '''''JP Boyd on Family Law''''', hosted by Courthouse Libraries BC, has indepth coverage of family property, excluded property, and family debt.
:Web: [http://wiki.clicklaw.bc.ca/index.php/Property_%26_Debt_in_Family_Law_Matters wiki.clicklaw.bc.ca]


==More information==
For more information about family property, excluded property and family debt, see the [http://wiki.clicklaw.bc.ca/index.php/Property_%26_Debt_in_Family_Law_Matters property and debt section] of the wikibook ''JP Boyd on Family Law'' provided by Courthouse Libraries BC.




[updated May 2017]
[updated May 2017]


'''The above was last reviewed for legal accuracy by Zahra H. Jimale.'''
'''The above was last reviewed for legal accuracy by [http://jimalelawcorp.com/about-zahra/ Zahra H. Jimale], Jimale Law Corporation.'''
 
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Revision as of 06:13, 13 February 2019

This script discusses dividing property and debt between married spouses and unmarried spouses when their relationship breaks down.

When a relationship ends, spouses are presumed to keep property they brought into the relationship and to share in property they acquired during their relationship. The same goes for debt.

Understand your legal rights

The rules around property division apply to “spouses”

In BC, the Family Law Act deals with the division of property and debt when a couple separates. This law applies to people who are spouses. A spouse is defined as:

  • people who are married, or
  • people who have lived together in a “marriage-like relationship” for at least two years.

Spouses are presumed to keep the property each of them brought into the relationship and to share in the things they acquired during their relationship. The same rules apply about debt. Spouses are presumed to share responsibility for the debts that accumulated during their relationship.

If you don’t qualify as a spouse, the laws that apply to your situation are different. See our information for couples who are not spouses (no. 148).

Each spouse is presumed to keep certain “excluded” property

Under BC law, certain property is defined as “excluded property”. Property a spouse brought into the relationship is excluded property. So is certain kinds of property a spouse received during the relationship, such as a gift from someone else, an inheritance, or a court award. Property bought with excluded property is excluded property.

Excluded property is presumed to remain the property of the spouse who brought it into the relationship or received it. (However, any increase in value of excluded property during the relationship becomes family property and is shared.)

Tip

Courts have frequently grappled with what property qualifies as excluded property. If you have property that may be excluded property, it is highly advisable to get legal advice from a family law lawyer.

Each spouse is presumed to share equally in “family property”

All property owned by either or both spouses at the date of separation is family property unless it is excluded property. Family property is presumed to be shared equally between the spouses, regardless of their use of or contribution to that property.

Family property can include real property, interests in companies or businesses, money a spouse is owed (such as an income tax refund), bank accounts, retirement savings accounts, and pensions. Family property also includes any increase in the value of excluded property during the relationship.

Each spouse is presumed to have a one-half interest in all family property, regardless of their use of or contribution to that property.

Each spouse is presumed to share equally in “family debt”

All debt incurred by either or both spouses during their relationship is family debt. Responsibility for family debt is presumed to be shared equally between spouses, regardless of their use of or contribution to that debt.

Family debt includes debt run up after separation if the debt was incurred to pay for or maintain family property.

There are exceptions to the equal division rule

Under BC law, if it would be significantly unfair to equally divide family property or family debt, a court may order an unequal division. The presumption of an equal division of family property and family debt is very strong. The unfairness must be "weighty, meaningful or compelling".

In considering whether an equal division would be significantly unfair, a court will look at factors such as: the length of the spouses’ relationship

  • whether the debt was incurred in the normal course of the spouses’ relationship
  • if the amount of family debt exceeds the value of family property, the ability of each spouse to pay a share of the family debt
  • whether a spouse, after separation, caused a significant increase or decrease in the value of debt or property
  • whether a spouse may have to pay taxes as a result of a transfer of property

Common questions

Are RRSPs and pensions family property?

Yes. The amount of any Registered Retirement Savings Plans (RRSPs) or pensions that each spouse accumulated during the relationship is family property. There are special rules in the Family Law Act for dividing most kinds of pension plans. There are separate rules for dividing other pensions and Canada Pension Plan credits that are not found in the Family Law Act. A lawyer can help with this.

Are shares in a company family property?

Yes. A spouse’s shares in a company are family property. This can be a complicated issue and it is highly advisable to speak to a lawyer if you or your spouse has an interest in a company.

Is an inheritance family property?

Generally speaking, no. An inheritance that a spouse receives before, during or after a relationship is part of that spouse’s excluded property. In some unique circumstances, an inheritance can lose its excluded status. If an inheritance is in play, it is advisable to get legal advice from a family law lawyer. As well, note that any amount an inheritance increased in value during the relationship is family property.

What happens if a spouse tries to hide or sell property?

A court can prevent the transfer of property to a third person if the court believes the transfer is being made to limit or interfere with the other spouse’s interest in the property. The court can also reverse a transfer that’s already occurred, whether before or after separation, and make a “compensation order” to repay a spouse for property transferred to frustrate the spouse’s interest in the property.

Can spouses agree to an unequal division of family property and family debt?

Yes. Spouses can agree to an unequal division of property and debt in a separation agreement' or by a court order called a “consent order”. Also, they might have made a marriage agreement when they got married (or cohabitation agreement when they began to live together) sorting out their interests in excluded property or family property.

Courts respect agreements about property and debt division and will uphold them as long as the agreements are fair. For more on family law agreements, see our information on separation agreements (no. 115) and marriage and cohabitation agreements (no. 162).

Can a court divide excluded property?

Yes, in some cases. The presumption that a spouse should be entitled to keep their excluded property is very strong. But a court can divide excluded property if:

  • family property or family debt outside British Columbia cannot be divided, or
  • it would be significantly unfair not to divide excluded property, considering the length of the spouses’ relationship and the non-owning spouse’s direct contribution to the excluded property.

Can spouses agree to divide excluded property?

Yes. Spouses can make an agreement at the start, during or end of their relationship that excluded property will be treated like family property and be divided between them.

On what date does family property and family debt get divided?

On the date the spouses separate, each spouse becomes a one-half owner of all family property as a tenant-in-common, and each spouse becomes responsible for one-half of the family debt.

Do I need to go to court?

It is not necessary to start a court case to divide property or debt, and (if you’re married) you do not need to get a divorce order first. You can make an agreement to divide property and debt.

However, if you and your spouse can’t agree on how to divide property and debt, you will need to apply to court for an order dividing property and debt. A claim to divide property and debt must be brought within two years of the date of divorce (for married spouses) or date of separation (for unmarried spouses).

Get help

With more information

The wikibook JP Boyd on Family Law, hosted by Courthouse Libraries BC, has indepth coverage of family property, excluded property, and family debt.

Web: wiki.clicklaw.bc.ca


[updated May 2017]

The above was last reviewed for legal accuracy by Zahra H. Jimale, Jimale Law Corporation.



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