Assets of Couples (3:IX): Difference between revisions
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{{REVIEWED LSLAP | date= | {{REVIEWED LSLAP | date= June 23, 2024}} | ||
{{LSLAP Manual TOC|expanded = family}} | {{LSLAP Manual TOC|expanded = family}} | ||
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=== 2. Family Law Act [FLA] === | === 2. Family Law Act [FLA] === | ||
Section 81 of the ''FLA'' outlines that each spouse is entitled to an undivided, one-half interest of family property and is equally responsible for debt upon separation (Stonehouse v Stonehouse, 2014 BCSC 1057; Joffres v Joffres, 2014 BCSC 1778). However, the FLA substantially changes what is considered to be family property, essentially allowing spouses to keep property they bring into a relationship and share only in the increase in value of that property and the net value of new property obtained after cohabitation or marriage. | Section 81 of the ''FLA'' outlines that each spouse is entitled to an undivided, one-half interest of family property and is equally responsible for debt upon separation (Stonehouse v Stonehouse, 2014 BCSC 1057; Joffres v Joffres, 2014 BCSC 1778). However, the ''FLA'' substantially changes what is considered to be family property, essentially allowing spouses to keep property they bring into a relationship and share only in the increase in value of that property and the net value of new property obtained after cohabitation or marriage. | ||
The FLA carves out a category of excluded property under section 85. Section 85 (1) of the FLA reads as follows: | Section 81.1 of the ''FLA'' specifies that the common law doctrines of presumption of advancement and presumption of resulting trust do not apply to questions of ownership of property between spouses. | ||
The ''FLA'' carves out a category of ''excluded property'' under section 85. Section 85 (1) of the ''FLA'' reads as follows: | |||
The following is excluded from family property: | The following is excluded from family property: | ||
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Any increases in the value of the excluded property that occur during the relationship are considered family property and are not excluded from division. The spouse claiming that the property in question qualifies as excluded property is responsible for demonstrating that it fits the definition under s 85(1) (Bressette v Henderson, 2013 BCSC 1661). | Any increases in the value of the excluded property that occur during the relationship are considered family property and are not excluded from division. The spouse claiming that the property in question qualifies as excluded property is responsible for demonstrating that it fits the definition under s 85(1) (Bressette v Henderson, 2013 BCSC 1661). | ||
However, if property is excluded under s 85(1), then it remains excluded even if legal or beneficial ownership transfers from one spouse to the other. | |||
This property division regime applies to all married spouses as well as all unmarried common-law spouses who have lived in a marriage-like relationship for at least two years. The date of separation will be the relevant date used to identify the pool of family property to be divided. However, it is the date of the hearing or agreement which determines the date of valuation of property. Spouses may choose to opt out of these property division rules but must make these different arrangements through an agreement. | This property division regime applies to all married spouses as well as all unmarried common-law spouses who have lived in a marriage-like relationship for at least two years. The date of separation will be the relevant date used to identify the pool of family property to be divided. However, it is the date of the hearing or agreement which determines the date of valuation of property. Spouses may choose to opt out of these property division rules but must make these different arrangements through an agreement. | ||
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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. | 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 | === 3. Pensions, RRSPs, LIFs and LIRAs === | ||
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. | 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. | 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. | ||
The manner in which benefits are divided depends on the type of pension plan. For plans where benefits are determined under a defined contribution provision – where the member (or someone on the member’s behalf, such as an employer) makes contributions to the account, and benefits are determined based on actual contributions and returns, similar to an RRSP – the spouse may receive a lump sum immediately (transferred to a prescribed locked-in financial vehicle), or with the consent of the plan administrator, become a limited member of the plan (s 144) and have their proportionate share administered under the same plan. | |||
For plans where benefits are determined under a benefit formula provision – where the benefits are calculated based on a predetermined formula, often using factors such as age, pre-retirement salary, employment history, etc., rather than actual contributions – the spouse may elect to receive a lump sum only if the division is made before the pension commences, and then they will receive it only when the pension commences (in contrast to defined contribution plans, where the lump sum is received immediately). Otherwise, the spouse must become a limited member of the plan. If the division is made before the pension commences, the spouse is entitled to a separate pension payable for the spouse’s lifetime; if the division is made after the pension commences, the spouse is entitled to a portion of payments for the member’s lifetime (or until benefits terminate under the plan). | |||
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, the benefits are considered to be allocated to the member (s 111). | |||
If an agreement or order | 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 the pension administrator, to divide the benefits in accordance with Part 6 of the ''FLA'', and unless the member and spouse agree otherwise, the original agreement or order must be administered in accordance with the regulations. | ||
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. | |||
'''NOTE:''' | '''NOTE''': Bill 17, which received Royal Assent on May 11, 2023, amended the ''FLA'' to clarify that Life Income Funds (LIFs) and Locked-in Retirement Accounts (LIRAs) are considered pension benefits that can be divided under Part 6 of the ''FLA''. It also provides provisions for dividing money held in LIFs and LIRAs (s 117.1). However, as of the editing of this manual, these changes are not yet in force pending regulation. | ||
=== 4. Real Property === | === 4. Real Property === | ||
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==== d) Supreme Court Family Rules Rule 12-1 and 12-2 and section 91 of the Family Law Act ==== | ==== 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: | 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 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 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 | ||
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=== 5. Business Assets === | === 5. Business Assets === | ||
Business property is family property unless it is excluded property under the FLA. | Business property is family property unless it is excluded property under the ''FLA''. | ||
=== 6. Companion Animals === | |||
Guide dogs, service dogs, animals owned as part of a business or for agricultural purposes are not considered companion animals under the ''FLA'' (s 3.1). | |||
Spouses may agree to jointly own, share possession or give exclusive ownership or possession of a companion animal to one of the spouses (''FLA'' s 92). However, if the spouses cannot come to an agreement and the Supreme Court makes an order regarding a companion animal, it cannot order that the spouses jointly own or share possession of the animal. In making such an order, the Supreme Court must consider a variety of factors relating to the animal’s welfare (''FLA'' s 97), such as whether a party has a history of violence towards the animal. | |||
== D. Use of Assets == | == D. Use of Assets == | ||
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== 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. | 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. | 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. | ||
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== 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: | 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): | * Order an interim distribution of family property that is at issue to provide money to fund (s 89): | ||
** Family dispute resolution, | ** Family dispute resolution, | ||
** All or part of a proceeding under the FLA, or | ** 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. | ** 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 temporary exclusive occupation and possession of the family residence by just one spouse (s 90). | ||