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Difference between revisions of "Assets of Couples (3:IX)"
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== C. Types of Assets == | == C. Types of Assets == | ||
=== 1. Family Property === | |||
Under section 84 of the FLA, family property includes all real and personal property owned by one or both spouses at the date of separation unless the asset in question is excluded, in which case only the increase in the value of the asset during the relationship is divisible. It is no longer relevant whether an asset was ordinarily used for a family purpose in deciding if it is family property. | |||
Pursuant to section 85 of the FLA, certain property is excluded from family property, including the following: | |||
* Property acquired by a spouse before the relationship between the spouses began; | |||
* Gifts (from a third party) or inheritances to one spouse, unless the gift or inheritance was transferred into the parties’ joint names or the other spouse’s sole name, in which case there is an argument that it was gifted to the other spouse and becomes family property; | |||
* Most damage awards and insurance proceeds, except those intended to compensate both spouses and loss of income of one spouse; | |||
* Some kinds of trust property; | |||
** Under s 85(e), property that is described in s 85(a) to (d) and is held in trust for the benefit of a spouse | |||
** A spouse’s beneficial interest in property held in a discretionary trust to which the spouse did not contribute, and that is settled by a person other than the spouse are also excluded from family property under s 85(f) | |||
Family property is presumptively divided equally unless it would be significantly unfair to do so (ss. 81 and 95 of the FLA). | |||
Family debt, which is new in the FLA, is divided equally, unless equal division would be significantly unfair to one spouse. The value of all property is calculated at either an agreed date, or at the date of a court hearing respecting the division of family property and family debt. Any increases in the value of the excluded property that occur during the relationship are considered family property and are not excluded from division. | |||
=== 2. Savings === | |||
Under the FLA, all money held by one spouse in a financial institution is considered family property and equally divisible, unless that spouse can prove that it is excluded property. | |||
=== 3. Pensions and RRSPs === | |||
Rights under an annuity, pension, home ownership, or registered retirement savings plan are considered family property, including each party’s Canadian Pension Plan (CPP) credits. | |||
The division of pensions is clarified in the FLA. Unless the pension is proven to be excluded property, it will be divisible. The presumption is equal division unless it would be significantly unfair based on the considerations in s 95 of the FLA. If a spouse is to receive benefits at a later date, they may become a limited member of the plan. If they cease to be a limited member then their share is transferred. A spouse can generally either choose to have a lump-sum payment of their share, to have a separate pension payment issued to them (s 115), or a hybrid of both (s 116). This decision may be made at any time (either before or after the pension commences) but the division will only occur after the pension has commenced (s 115). | |||
If an agreement or order regarding the benefits of a pension provides that the benefits are not divisible or is silent on entitlement to benefits, a member and a spouse may agree to have benefits divided before the earliest of the following: | |||
# Benefits are divided under the original agreement or order, | |||
# The member or spouse dies, or | |||
# Benefits are terminated under the plan. | |||
If an agreement or order provides that the member must pay the spouse a proportionate share of benefits under a plan where the member’s pension commences and the member’s pension has not commenced, the member and spouse may agree, by the spouse giving notice to Division 2 of Part 6 of the FLA, to divide the benefits in accordance with the Part, and unless the member and spouse agree otherwise, the original agreement or order must be administered in accordance with the regulations. | |||
'''NOTE:''' BC is one of the few provinces that allow spouses to enter into a written agreement to waive the equalization of their pensionable credits under the CPP. | |||
=== 4. Real Property === | |||
It is often necessary to take early steps to secure the title to real property when there is a separation. In fact, it is recommended for clients to file as soon as possible to avoid missing any limitation dates and preserve their claim. This is particularly so where property is registered in the name of only one spouse, and there is a risk of that party disposing of or encumbering the property, or where judgments are likely to be registered against one party’s interest, which might prejudice the other party. Under section 91 of the FLA and Rules 12-1 and 12-4 of the Supreme Court Family Rules, one may request an automatic restraining order to prevent the sale or disposal of family property including real property. There are several ways of protecting a spouse’s interest: | |||
==== a) Certificates of Pending Litigation and Caveats ==== | |||
Caveats and Certificates of Pending Litigation are warnings to potential purchasers and establish claim priority over the property from the day the Caveat or Certificate of Pending Litigation is filed. This document will defeat the presumption of claim priority given to the bona fide purchaser for value. Entitlement to a certificate of pending litigation is limited. See the Land Title Act, RSBC 1996, c250 and Annotated Land Title Act by Gregory and Gregory for the procedure and forms. Note that Caveats have an expiry date and are therefore a temporary measure to protect a party’s interest. | |||
==== b) Land (Spouse Protection) Act, RSBC 1996, c 246 ==== | |||
This Act applies where a party has elected not to commence legal proceedings but needs to protect their interest in real property. It provides an alternative to a Certificate of Pending Litigation for a married spouse (not common law) where the “property” was the “matrimonial home”. The Act allows a charge to be placed on land that will prevent disposition of the property without the written consent of the applicant for the charge (refer to the Land (Spouse Protection) Act and the Land Title Act for the registration procedure). Note that this only applies while the parties are legally married. The charge may be struck out on the death of, or final divorce from, the applicant. | |||
Registration of a charge by one spouse under the Land (Spouse Protection) Act prevents the other spouse from selling or encumbering their share but is not protection against a creditor who could obtain an order for sale of the house. So long as one is legally married to their spouse, one may file against the property without the other spouse’s notice or consent, in order to prevent the transfer of the property. | |||
==== c) Registration of a Notice Under the Land Title Act ==== | |||
A spouse who is a party to a cohabitation agreement, a marriage agreement, or a separation agreement may file a notice in the Land Title Office regarding any lands to which the agreement relates (FLA s 99). This applies to married spouses and common-law spouses who have lived in a marriage-like relationship for at least two years. | |||
The information required in the notice includes the names and addresses of the spouses, the legal description of the land, and the provisions of the agreement relating to that land. The Registrar may then register this notice in the same manner as a charge on the land. | |||
Once the notice is registered, there can be no subsequent registration of a lease, mortgage, transfer, etc., unless both spouses or former spouses sign a cancellation or postponement notice in the prescribed form. A spouse or former spouse may apply to the Supreme Court for an order to cancel or postpone a notice where the other party to the agreement cannot be found after reasonable search, unreasonably refuses to sign a cancellation or postponement, or is mentally incompetent. | |||
The use of this notice also extends to mobile homes. | |||
==== d) Supreme Court Family Rules Rule 12-1 and 12-2 and section 91 of the Family Law Act ==== | |||
Section 91 of the FLA and SCFR R 12-1 and 12-2 allow for temporary orders respecting the protection of property. On application by a party, the Supreme Court can: | |||
* Make an order restraining the other party from disposing of any property at issue under Part 5 (property) or Part 6 (pension division); | |||
* Make an order for the detention, custody, or preservation of any property that is the subject matter of a family law case or as to which a question may arise | |||
* Make an order to allow the whole or party of the income of the property to be paid to a party who has an interest in it | |||
* In the case of personal property, make an order that part of the personal property be delivered to or transferred to a party; and | |||
* Make an order for a pre-trial injunction. | |||
=== 5. Business Assets === | |||
Business property is family property unless it is excluded property under the FLA. | |||
== D. Use of Assets == | == D. Use of Assets == | ||
The Court can award one spouse exclusive use of assets pending further agreement between the parties or a Court order. This can include large assets such as a home and car; or smaller assets as may be required to operate a business, or for the departing spouse’s television, computer, or books, for example. | |||
== E. Unmarried Couples == | == E. Unmarried Couples == | ||
Under the FLA, unmarried couples who have lived in a marriage-like relationship for at least two years are treated the same way as married couples. Unless an action was started under the FRA, the FLA now applies (as long as the time limit has not expired) and may apply even if proceedings have already been commenced. | |||
The courts will recognize an equitable interest of a common-law spouse in all the property and assets acquired by the couple through the joint efforts of the two spouses, although registered in the name of the other spouse (i.e. a constructive trust). The scope of constructive trusts was greatly expanded in Peter v Beblow (1993), 3 WWR 337, 77 BCLR (2d) 1, in which the Court found a constructive trust arising from the contributions made by homemaking and childcare services, which allowed for the retention of money that would otherwise be paid for such services to be used as mortgage payments. Claims in trust may be constructive (as follows), resulting (implied trusts), or express. Constructive trusts are the most common type of trust claim, where the Court imposes a trust to remedy the unjust enrichment of one party at the deprivation of the other. However, there are limits, and a court will not interfere where the elements of constructive trust are not present. A causal connection must be found to exist between the contribution made and the property in question. Refer to a general text for a more comprehensive description of the elements of constructive trust. Because common law constructive trusts are relief granted by a court, spouses can make use of both the FLA requirements for equal division and common law constructive trust principles when seeking relief for unfair division of property. | |||
== F. Interim Relief == | == F. Interim Relief == | ||
The Court may make a number of orders for interim relief under Part 5, Division 3 of the FLA. This means that prior to a trial on all the issues in the proceeding, the Court may: | |||
* Order an interim distribution of family property that is at issue to provide money to fund (s 89): | |||
** Family dispute resolution, | |||
** All or part of a proceeding under the FLA, or | |||
** Obtaining information or evidence in support of family dispute resolution or an application to a court. | |||
* Order temporary exclusive occupation and possession of the family residence by just one spouse (s 90). | |||
* Order restraining a spouse from disposing of any property at issue under Part 5 (property division) or Part 6 (pension division) until or unless the other spouse establishes that a claim made under Part 5 or Part 6 will not be defeated or adversely affected by the disposal of property (s 91(1)). | |||
* Order the possession, delivery, safekeeping, and preservation of property (s 91(2)(a)). | |||
* Prohibit one spouse from disposing of, transferring, converting, or exchanging into another form, property in which the application may have an interest, or vesting all or a portion of property in, or in trust for, the application (s 91(2)(b)). | |||
== G. Limitation Period == | == G. Limitation Period == | ||
See Section XV Part B: Limitation Dates for the limitation periods for beginning property division proceedings for married spouses and common-law spouses. [[Limitation Dates (3:XV) |Section XV Part B: Limitation Dates]] | |||
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