If you are going through a divorce in BC or separation, one of the most important and likely contentious issues to deal with is how property will be divided between you and your spouse. This article will explain how property is divided after divorce or separation.
The law on division of property in British Columbia is governed by the Family Law Act (FLA) which applies to both married spouses and marriage-like relationships. To determine if property division applies to your separation, you can read our post on “When do I become a spouse for the purpose of property division under the Family Law Act in B.C.?” Under the FLA, each spouse is entitled to an equal division of all family property and debt.
What is Family Property and Debt?
The starting presumption is that all property and debt acquired during the marriage or marriage-like relationships is Family Property and is therefore subject to property division. This also includes any appreciation of property that was acquired before the relationship. However, if you have a prenuptial agreement, a marriage agreement, or a cohabitation agreement, you may have already agreed that certain property is excluded from division. In addition, the FLA considers certain types of property to be excluded property which will remain one spouse’s separate property after separation. For example, inheritances, gifts from a third party, and a settlement or an award of damages as compensation for loss or injury are all considered excluded property and are subject to division of property. You can find out more about excluded property in our Guide to Excluded Property.
So how do you determine what property should be divided, and what property should be excluded? There are two basic ways to do this: through an agreement, or by court order.
Separation Agreement
Property and debt can be divided by reaching an agreement with your spouse on who will keep what. To make sure that the agreement you reached is enforceable, it should be in the form of a written Separation Agreement. This is a contract between you and your spouse which will outline what property will be kept as separate property, what property is family property, and how family property will be divided between you. You and your spouse should both get independent legal advice regarding the Separation Agreement as certain rights are afforded to each of you under the Family Law Act, and you both need to be made aware of these rights when you make an agreement. This is very important because a court may set aside an agreement on property division if they determine that the agreement was not reached in a fair manner, a spouse did not understand the consequences of the agreement, or if they deem the agreement to be significantly unfair. If you and your spouse are having difficulty reaching an agreement, you can utilize alternative processes such as Mediation or Collaborative Divorce to assist you in finding common ground.
Court Order
If you are unable to agree with your spouse on how property should be divided, you or your spouse can start a family proceeding and apply to the court for an order respecting property division. The court will determine what is family property and debt, what is excluded property, and how family property and debt will be divided. While the presumption is still that family property and debt will be divided equally, the court may also make an order for an unequal division if it determines that it is significantly unfair to divide family property and debt equally. There are a variety of factors which are considered in determining whether there should be an unequal division of property including the duration of the relationship, one spouse’s contribution to the career of the other spouse, and whether a spouse has acted in bad faith by disposing of or converting family property to decrease its value.
Overall the division of property can be quite complicated and confusing, and we always recommend you consult with a legal professional to make sure you understand all of your rights.
We hope this article on division of property has helped you understand better how property is divided after divorce in BC or separation. If you and your spouse are going through a divorce or separation, please give us a call at 604-449-7779 and we would be honored to assist you.