In British Columbia, in the majority of cases family property is divided equally when spouses separate. This applies to both couples that are married and couples that are in marriage-like relationships, such as common-law and cohabiting couples.
There are three exceptions to an equal division of family property.
- if there is a pre-existing agreement, such as a prenuptial agreement or a cohabitation agreement that states otherwise,
- the couple decides on an unequal division of family property, usually in a separation agreement, and
- when a court finds that dividing family property or debt equally is significantly unfair to one party.
In this blog post, we will expand on the second and third exceptions.
What is Family Property?
Before we expand on what the law says about equal and unequal divisions of property, we should first establish what exactly qualifies as family property.
When you make a purchase, the item or property, in most cases, belongs to you. But in a marriage, this is often not the case. The idea behind this is that the government aims at treating the ‘home-maker’ and the ‘bread-winner’ as equals, and therefore after separation it would be wrong to give everything to the ‘bread-winner’, and leave the ‘homemaker’ with nothing.
While the terms may sound antiquated, the principle continues to apply to households where one spouse makes significantly more in income, and the other spouse contributes significantly more time to the household.
Family property is everything that you and your spouse both had on the day of your separation which includes assets and debts. This will include, but may not be limited to: the family house, RRSPs (pension funds), investments, bank accounts, insurance details, pensions, interest, and any increase in value of these properties. This may also include debt.
What am I entitled to in a divorce?
In most cases (and we’ll get into the exceptions later in this blog post), you and your spouse will both be entitled to 50% of all family property.
You will also be entitled to any “excluded property” which is in your name, and your spouse will be entitled to any excluded property in their name.
Excluded property is anything accumulated before or after your separation, as opposed to family property, which is accumulated during the relationship.
Common examples of excluded property include gifts and inheritance. This is anything which will have voluntarily been given to one particular person instead of the married couple.
When is equal division of Family Property ‘unfair’?
Nature of the Relationship
The state, nature, and length of your relationship could become a factor when the courts decide how your property is going to be split. In certain cases, where the relationship hasn’t lasted very long, there is a bit of room for the 50-50 split rules to be bent.
Complex situations, where the career pursuits and success of one spouse has been enabled by the other spouse, may be taken into account by the court. This will change the balance of the entitlements as one party’s contributions directly helped the other party’s individual career.
The Value of Assets and Debt
The financial situation of each party will also be taken into account. The newest laws are centered around treating both spouses as equals, recognizing the balance of financial and time contributions to the household. In situations where a considerable debt has been acquired, especially when the debt is more than the value of the house, the courts may differ from the usual 50/50 split if the debt will burden one party significantly more than the other.
Situations where the actions of one spouse has caused the value of the house to decrease will also be taken into consideration during such trials. If one spouse has caused damage to family property, it would be unjustified to punish another person, and the courts will weigh the division accordingly.
In the vast majority of cases, after a divorce, the assets and debts that each spouse receives will be split into two equal amounts. The above are some of the many examples of how a couple can have an unequal, yet fair division of family property. This division can be achieved through a separation agreement drawn up by a lawyer, or by commencing an action in the Supreme court.
If you feel that a 50-50 division may be unfair to you, give us a call today.