View source for Basic Principles of Property and Debt in Family Law

==Introduction==

The basic plan for the division of property and debt under the provincial ''[[Family Law Act]]'' is pretty straightforward. You keep what you bring into the relationship, and you split what you get as well as any value that has accumulated in excluded property (i.e. increase in value of excluded property) during the relationship. Of course it's a lot more complicated than this, but that's the basic concept the ''Family Law Act'' is built on.

Part 5 of the ''Family Law Act'' deals with the division of property and debt, and provides the definitions of: 
* ''family property'' (s.84) and ''family debt'' (s.86) — presumed to be shared between spouses, and 
* ''excluded property'' (s.85) — presumed to remain the sole property of the spouse who owns it. 

Part 6 of the ''Family Law Act'' talks about the division of pensions between spouses and says which portion of a pension is supposed to be shared and which parts remain the property of the pension member. 

This section looks into the nooks and crannies of Part 5 of the act in some detail, but it doesn't say much about pensions because the division of pensions can be extremely complicated. For information about that, you should speak to a family law lawyer. A pension can be a very valuable asset. It is important to include it when dividing property.

===Do you have ''standing'' and the right to make a claim under the ''Family Law Act''?===

In legal terms, ''standing'' refers to the right to bring a claim before a judge. Under the ''Family Law Act'', spouses can ask the Supreme Court to divide property and debt upon separation. 

Here's the bare essentials for the purposes of the sections of the Act that deal with property division:
* If you are married, then you are a spouse. You have standing. 
* If you are unmarried, but have lived together in a marriage-like relationship for at least two years, then you are a spouse. You have standing. 
* If you are unmarried, but have ''not'' lived together in a marriage-like relationship for at least two two years, then you are not a spouse. You do not have standing. 

Here's the formal language from section 3:
<blockquote><tt>(1) A person is a spouse for the purposes of this Act if the person</tt></blockquote>
<blockquote><blockquote><tt>(a) is married to another person, or</tt></blockquote></blockquote>
<blockquote><blockquote><tt>(b) has lived with another person in a marriage-like relationship, and</tt></blockquote></blockquote>
<blockquote><blockquote><blockquote><tt>(i) has done so for a continuous period of at least 2 years, or</tt></blockquote></blockquote></blockquote>
<blockquote><blockquote><blockquote><tt>(ii) except in Parts 5 [Property Division] and 6 [Pension Division], has a child with the other person.</tt></blockquote></blockquote></blockquote>
<blockquote><tt>(2) A spouse includes a former spouse.</tt></blockquote>

Note that subsection 3(1)(b)(i) adds a twist. It creates different definitions of ''spouse'' (and therefore different requirements for ''standing'') depending on which part of the ''Family Law Act'' the claim is made under. For other parts of the Act, if you lived in a marriage-like relationship ''and had a child together'', it doesn't matter how long you lived together. For the property and pension division-related sections in Parts 5 and 6 of the Act, you can disregard this subsection. Just having a child together won't give you ''standing''. 

Again, unless you're married, living together for less than two years means you do not have ''standing'' to make claims for property division under the ''Family Law Act''. 

====Common law claims for people in shorter relationships==== 
If you were in a domestic relationship with someone for less than two years, you ''might'' have potential equitable claims that you can raise. Examples of equitable claims include unjust enrichment and constructive trust claims, and resulting trust claims. Common law couples used to make unjust enrichment and constructive trust claims, and resulting trust claims all the time before the ''Family Law Act'' granted them property division rights.  

The challenge is that equitable claims are much more complicated, require a lot of evidence, and are harder to succeed with. This is especially true for short-term relationships, and it must be said that the history of facts required to build a strong case for unjust enrichment in a domestic relationship usually takes time to ripen. Unless a significant event occurred during the brief relationship (like a home was purchased by the couple, but one of them gained much for almost nothing, while the other lost a lot for no good reason), claims to another person's property based on having run some errands, done some chores, or gratuitously performed some favours for 18 months will be hard to substantiate. 

Common law claims that apply to unmarried people who have lived together for less than two years spouses are discussed in this chapter under the [[Property and Debt in Family Law Matters]] section.

===Period of entitlement===

''Period of entitlement'' refers to the time frame during which spouses have a valid claim to divide up family property or family debts. Sorting out when this period starts, and when it ends, is critical. In simple terms, the entitlement period starts when individuals either get married, or start living together in a marriage-like relationship, whichever is earlier. The period ends when they separate.
====Starting date====
The ''start date'' for the period of entitlement is the date the spouses' relationship begins. This is obviously important because that's when you determine the value of all the assets, and all the debts, that the individuals brought into the relationship. The source for this is found in the definition of ''excluded property'' at section 85:

<blockquote><tt>(1) The following is excluded from family property:</tt></blockquote>
<blockquote><blockquote><tt>(a) property acquired by a spouse before the relationship between the spouses began</tt></blockquote></blockquote>

The start date with respect to the accumulation of ''family debt'' is stated more simply in section 86:

<blockquote><tt>Family debt includes all financial obligations incurred by a spouse</tt></blockquote>
<blockquote><blockquote><tt>(a) during the period beginning when the relationship between the spouses begins and ending when the spouses separate</tt></blockquote></blockquote>

====End date====
The ''end date'' for the entitlement period is found in the definition of ''family property'', and is presumed to be "the date the spouses separate". The source for this is section 84(1):

<blockquote><tt>Subject to section 85 [excluded property], family property is all real property and personal property as follows:</tt></blockquote>
<blockquote><tt><blockquote><tt>(a) on the date the spouses separate, property</tt></blockquote></tt></blockquote>
<blockquote><tt><blockquote><blockquote><tt>(i) that is owned by at least one spouse, or</tt></blockquote></blockquote></tt></blockquote>
<blockquote><tt><blockquote><blockquote><tt>(ii) in which at least one spouse has a beneficial interest</tt></blockquote></blockquote></tt></blockquote>

As you can see, the date when "the relationship between the spouses began" and the date "the spouses separate" are very important. These are the dates that mark the end of acquiring excluded property and personal debt, the start of acquiring shareable family property and family debt, and the end of acquiring family property and family debt.

====Date of cohabitation and the date of marriage====

Section 3(3) of the ''Family Law Act'' tells us when a relationship between spouses begins:

<blockquote><tt>(3) A relationship between spouses begins on the earlier of the following:</tt></blockquote>
<blockquote><blockquote><tt>(a) the date on which they began to live together in a marriage-like relationship;</tt></blockquote></blockquote>
<blockquote><blockquote><tt>(b) the date of their marriage.</tt></blockquote></blockquote>

For married spouses, their relationship starts on the earlier of the date they began to live together in a marriage-like relationship or got married. For unmarried spouses, once the parties have lived together for two years, their relationship as spouses is considered to have started on the date they began to live together.

The date of a couple's marriage is pretty obvious. It isn't always so obvious when a couple "begins" to live together in a marriage-like relationship. The judge in a 2003 case from the Saskatchewan Court of Queen's Bench, ''[https://canlii.ca/t/5bpc Yakiwchuk v. Oaks]'', 2003 SKQB 124, (and a case that has been followed here in BC) expressed the problem this way:

<blockquote>"With married couples, the relationship is easy to establish. The marriage ceremony is a public declaration of their commitment and intent. Relationships outside marriage are much more difficult to ascertain. Rarely is there any type of 'public' declaration of intent. Often people begin cohabiting with little forethought or planning. Their motivation is often nothing more than wanting to 'be together'. Some individuals have chosen to enter relationships outside marriage because they did not want the legal obligations imposed by that status. Some individuals have simply given no thought as to how their relationship would operate. Often the date when the cohabitation actually began is blurred because people 'ease into' situations, spending more and more time together. Agreements between people verifying when their relationship began and how it will operate often do not exist."</blockquote>

Hands up, anyone who has ever begun to "cohabit with little forethought or planning?"

In this day and age, relationships are no longer defined by financial dependence, sexual relationships, or the mingling of property and finances alone. A judge cannot simply go through a checklist to conclude that a marriage-like relationship exists, and if a judge tries to use a simple checklist (as some have), then their decision is at the risk of an appeal. According to numerous Court of Appeal cases in this province, a judge has to determine when (or if) a marriage-like relationship began by looking holistically at a bunch of contextual factors. A judge must decide whether or not a relationship is marriage-like from an objective perspective. 

''[https://canlii.ca/t/jx99d L.T.F. v R.B.F]'', 2023 BCSC 834, is a recent case where the court summarizes leading cases and various factors to bear in mind when trying to determine the starting date of a relationship. Read the section on [[Unmarried Spouses]] in the chapter on [[Family Relationships]], under the heading ''Qualifying as an unmarried spouse'', to learn more about when marriage-like relationships begin.

====The date of separation====

Separation usually needs three things:
# ''Intention'': one spouse decides that the relationship cannot continue
# ''Communication'': the spouse says the relationship cannot continue
# ''Action'': the spouse then takes steps to end the partnership-like qualities of the relationship, usually by:
#* stopping sleeping together, 
#* stopping doing chores for the other person, 
#* stopping going out together as a couple, and so on. 

Section 3(4) offers some guidance on when a spousal relationship ends.

<blockquote><tt>(4) For the purposes of this Act,</tt></blockquote>
<blockquote><blockquote><tt>(a) Spouses may be separated despite continuing to live in the same residence, and</tt></blockquote></blockquote>
<blockquote><blockquote><tt>(b) the court may consider, as evidence of separation,</tt></blockquote></blockquote>
<blockquote><blockquote><blockquote><tt>(i) communication, by one spouse to the other spouse, of an intention to separate permanently, and</tt></blockquote></blockquote></blockquote>
<blockquote><blockquote><blockquote><tt>(ii) an action, taken by a spouse, that demonstrates the spouse's intention to separate permanently.</tt></blockquote></blockquote></blockquote>

It's easy to imagine that the date of separation could be argued about, especially if the spouses reconciled for a bit or if a spouse's commitment to ending the marriage-like aspects of a relationship wavered from time to time. See ''[https://canlii.ca/t/hwm44 McDowell v Andrews]'', 2018 BCSC 2216, for an example of a relationship where the beginning and the end were hard to pin down, as was the ''marriage-like'' and ''non-marriage-like'' phases of it.

In <span class="noglossary">order</span> to avoid spending money on lawyers arguing about this issue, you might consider documenting the date of separation in some way, perhaps by sending a letter or an email to your spouse stating your intention to separate. Do remember to keep a copy.

===Time limits for making property division claims===

Section 198(2) of the ''Family Law Act'' imposes time limits for bringing claims for the division of property and debt. Understanding these limits is crucial for both married and unmarried spouses:

*Married spouses: Claims must be made within ''two years'' of the date of the ''divorce'' or an ''annulment'' of the marriage.
*Unmarried spouses: Claims must be made within ''two years'' of the date of ''separation''.

====Paused time limits====
Under section 198(5) the two year time limit is paused if parties are engaged in ''family dispute resolution'' with a qualified ''family dispute resolution professional'' as defined in section 1 of the Act. 

If you are involved in mediation, arbitration, or a collaborative dispute resolution process in an effort to resolve property division issues then the time limits for making a claim are probably on pause. 

Make sure that if you're using someone to help resolve your issues without going to court, that the person meets the definition of a ''family dispute resolution professional'' under the ''Family Law Act'' and part 3 of the accompanying [https://canlii.ca/t/8rdx#Part_3_Family_Dispute_Resolution_Professionals_14036 Family Law Act Regulation], otherwise time limits will not be paused.

Section 198(3) presents another important exception to the standard two-year time limit for property division claims following separation or divorce. This exception applies where a spouse seeks to set aside or replace an existing agreement and they have grounds to do so because a specific wrong was done:

* A spouse can apply to set aside or replace an agreement within ''two years'' from the date they first discovered, or reasonably ought to have discovered, grounds for making the application.
* Valid grounds for such an application may include situations like nondisclosure of significant assets, fraud, or undue influence at the time of making the agreement.

This exception allows for flexibility in cases where a spouse was coerced or deceived in a way that would have influenced their decision at the time of the agreement.

'''Example scenarios where time limits could be paused:'''
* Anju and Kishore, an unmarried couple, separated on January 1, 2022. They started mediation with a certified family dispute resolution professional on December 1, 2023. The two-year time limit for Anju to bring a property division claim pauses on December 1, 2023, extending beyond the original deadline of January 1, 2024.
* Mei and Luis, married, were granted a divorce on June 15, 2021. They began collaborative negotiation on June 1, 2023. Mei's time to file a property division claim, which would have ended on June 15, 2023, is extended due to their participation in the dispute resolution process.
* Fatima and Jamal, who divorced in 2020, had an agreement regarding property division. In 2023, more than two years after the divorce, Fatima discovered that Jamal had failed to disclose significant assets during their negotiations. She applies to set aside the agreement under section 198(3) of the Act within two years of discovering this non-disclosure. This application is valid as it is based on grounds of nondisclosure of significant property, which is a recognized reason for setting aside an agreement under the Act. This exception recognizes the importance of fair and informed consent in family law agreements and provides a remedy for situations where this standard may have been compromised.

For more detailed information, consider seeking legal advice or consulting the full text of the ''Family Law Act''.

===The philosophy behind the ''Family Law Act'' and its scheme for dividing property===

The scheme for dividing property under the ''Family Law Act'' is technically described as a ''deferred partnership of acquests'' regime. The ''deferred partnership of acquests'' regime focuses on property accumulated during the relationship, with both spouses having a presumed equal interest in such property that's only realized upon (and is therefore "deferred" until) separation. It emphasizes the timing and manner of acquisition of family property rather than how the property was used. Property acquired before the relationship or through certain means (like inheritance) is typically excluded, and known as "excluded property."

BC's old ''Family Relations Act'', which was retired in 2013, used a ''deferred community of property'' regime. The ''deferred community of property'' differs from the ''deferred partnership of acquests'' regime by focusing on how property was used. If property was "ordinarily used for a family purpose" it was considered for division, regardless of when or how it was acquired. This meant that the ownership of property was less significant than how it was utilized within the family context. Consequently, most assets owned by the spouses, irrespective of their individual contributions or the name on the title, were often subject to equal division upon separation.

====The ''Family Relations Act'' and the ''Family Law Act''====

Under the ''Family Relations Act'', married spouses shared in all property that was "ordinarily used for a family purpose." This meant that you didn't need to look at who owned something on paper, how something was acquired, or whether property was acquired before or during the relationship. What mattered was how the property was ''used''. For most couples, ''everything'' they had wound up being ordinarily used for a family purpose in one way or another.

Under the ''Family Law Act'', use is irrelevant. In fact that's exactly what section 81(a) says:

<blockquote><tt>spouses are both entitled to family property and responsible for family debt, regardless of their respective use or contribution</tt></blockquote>

What matters now, under the ''deferred partnership of acquests'' regime, is ''when'' property was acquired and ''how'' property was acquired:
* On the date of separation, each spouse is only presumed to have an interest in the assets that accumulated during their relationship (but not assets that can be traced to the other spouse's excluded property).
* Property bought before the spouses' relationship began is presumed to be excluded property.
* Property acquired during the relationship, but which was bought using money that can be traced to excluded property, is also presumed to be excluded property. 

Under the old ''deferred community of property'' regime of the ''Family Relations Act'': 
* Both spouses were presumed to have an interest in all property on the date of separation.

====Transition provisions====

The ''Family Law Act'' became law in British Columbia on 18 March 2013. All of the parts of the act about children and support applied to everyone right away, including people who were in the middle of a court proceeding. However, under section 252(2), married spouses who had started a court proceeding about the division of property or had an agreement about the division of property must continue under the old ''Family Relations Act'' as if it hadn't been cancelled, unless the spouses agree otherwise:

<blockquote><tt>(2) Unless the spouses agree otherwise, </tt></blockquote>
<blockquote><blockquote><tt>(a) a proceeding to enforce, set aside or replace an agreement respecting property division made before the coming into force of this section, or</tt></blockquote></blockquote>
<blockquote><blockquote><tt>(b) a proceeding respecting property division started under the former Act</tt></blockquote></blockquote>
<blockquote><tt>must be started or continued, as applicable, under the former Act as if the former Act had not been repealed.</tt></blockquote>

This rule only applies to married spouses because only married spouses could make property claims under the ''Family Relations Act''; it is not possible for unmarried spouses to "start or continue" a claim under that act.

The division of family property under the ''Family Relations Act'' is discussed later on in this section.