Source: http://wiki.clicklaw.bc.ca/index.php?title=Basic_Principles_of_Property_%26_Debt_in_Family_Law
Timestamp: 2017-07-21 00:46:30
Document Index: 410828694

Matched Legal Cases: ['art 5', 'art 6', 'art 5', 'art 6', 'arts 5', 'art 5', 'art 6']

Under the Family Law Act, spouses who are married or who lived together in a marriage-like relationshipIn family law, the quality of an unmarried couple's relationship that demonstrates their commitment to each other, their perception of themselves as a couple and their willingness to sacrifice individual advantages for the advantage of themselves as a couple; a legal requirement for a couple to be considered spouses without marrying. See "cohabitation," "marriage" and "spouse." for at least two years are entitled to share in the propertySomething which can be owned. See "chattels" and "real property." they acquired during their relationship, and to keep any property they each brought into the relationship. The same thing goes for debtA sum of money or an obligation owed by one person to another. A "debtor" is a person responsible for paying a debt; a "creditor" is the person to whom the debt is owed.. Spouses are equally responsible for the debt they accumulated during the relationship, but they are separately responsible for any debt that they had going into the relationship.
This all sounds pretty straightforward, but there are lots of details that can make the division of property and debt complicated. This section talks about how property and debt are divided between spouses under the Family Law Act and how they used to be divided under the Family Relations Act, what property is shareable family propertyA term under the ''Family Law Act'' referring to property acquired by either or both spouses during their relationship and after separation, if bought with family property. Both spouses are presumed to be equally entitled to share in family property. See "excluded property.", and what property is excluded from division. It also looks at the role marriage agreements and cohabitation agreements can play in controlling the impact of the Family Law Act.
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 during the relationship. Of course it's a lot more complicated than this, but that's the basic concept the actIntentionally doing a thing; a law passed by a government, also called "legislation" or a "statute." See "regulations." 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 and family debtA term under the ''Family Law Act'' referring to debt owed by either or both spouses that accumulated during the spouses' relationship and after separation, if used to maintain family property. Both spouses are presumed to be equally liable for family debt., the things that are presumed to be shared between spouses, and excluded propertyA term under the ''Family Law Act'' referring to property acquired by a spouse prior to the commencement of the spouses' relationship and certain property acquired by a spouse during the relationship, including gifts, inheritances, court awards and insurance proceedings. A spouse is presumed to be entitled to keep his or her excluded property without having to share it with the other spouse. See "family property," "gift," and "inheritance.", which is presumed to remain the property of the spouseUnder the ''Divorce Act'', either of two people who are married to one another, whether of the same or opposite genders. Under the ''Family Law Act'', married spouses, unmarried parties who have lived together in a marriage-like relationship for at least two years, and, for all purposes of the act other than the division of property or debt, unmarried parties who have lived together for less than two years but have had a child together. See "marriage" and "marriage-like relationship." 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 lawyerA person licensed to practice law in a particular jurisdiction. See "barrister and solicitor.". A pension can be a very valuable asset. It is important to include it when dividing property.
The end date for the accumulation of family property is presumed to be the date of separationIn family law, the decision of one or both parties to terminate a married or unmarried relationship; the act of one person leaving the family home to live somewhere else with the intention of terminating the relationship. There is no such thing as a "legal separation." In general, one separates by simply moving out, however it is possible to be separated but still live under the same roof. See "divorce, grounds of.". The start date is the date the spouses' relationship begins, and is found in the definition of excluded property at s. 85:
Date of cohabitation and the date of marriageA legal relationship between two persons, whether of the same or opposite genders, that is solemnized by a marriage commissioner or licenced religious official and gives rise to certain mutual rights, benefits and obligations. See also "conjugal rights," "consortium" and "marriage, validity of."
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 judgeA person appointed by the federal or provincial governments to manage and decide court proceedings in an impartial manner, independent of influence by the parties, the government or agents of the government. The decisions of a judge are binding upon the parties to the proceeding, and are subject to appeal. in a 2003 case from the Saskatchewan Court of Queen's Bench, Yakiwchuk v. Oaks, 2003 SKQB 124, expressed the problem this way:
"With married couples, the relationship is easy to establish. The marriage ceremony is a public declarationIn law, a pronouncement of the court about a fact or a state of affairs, such as a declaration that a marriage is void or that a person is the guardian of a child. Not to be confused with an order, which is a mandatory direction of the court requiring a party to do or not do something. See "order." 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."
(ii) an actionA court proceeding in which one party sues another for a specific remedy or relief, also called a "lawsuit" or a "case." An action for divorce, for example, is a court proceeding in which the claimant sues the respondent for the relief of a divorce order., taken by a spouse, that demonstrates the spouse's intention to separate permanently.
married spouses must bring their claimThe assertion of a legal right to an order or to a thing; the remedy or relief sought by a party to a court proceeding. within two years of the date of their divorceThe legal termination of a valid marriage by an order of a judge; the ending of a marital relationship and the conjugal obligations of each spouse to the other. See "conjugal rights," "marriage," and "marriage, validity of." or a declaration annulling their marriage, and
Under s. 198(5), however, the running of this time limit is considered to be suspended while the parties are engaged in family dispute resolutionA phrase referring to a family of processes used for resolving legal disputes including negotiation, collaborative settlement processes, mediation, arbitration and litigation. with a family dispute resolution professional. Both of these terms are defined in s. 1, and the running of the time limit will not stop if their dispute resolution process doesn't fall within the definition of "family dispute resolution" or if the spouses are not using the services of someone who falls within the definition of "family dispute resolution professional."
A partnership of acquests
The Family Relations Act and the Family Law Act
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 proceedingA legal proceeding in which one party sues another for a specific remedy or relief, also called an "action," a "lawsuit" or a "case." A court proceeding for divorce, for example, is a proceeding in which the claimant sues the respondent for the relief of a divorce order.. However, under s. 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:
(2) Unless the spouses agree otherwise, (a) a proceedingIn law, the whole of the conduct of a court proceeding, from beginning to end, and the steps in between; may also be used to refer to a specific hearing or trial. See "action." to enforce, set aside or replace an agreement respecting property division made before the coming into force of this section, or
Who gets what under the Family Law Act
Subject to an agreement or orderA mandatory direction of the court, binding and enforceable upon the parties to a court proceeding. An "interim order" is a temporary order made following the hearing of an interim application. A "final order" is a permanent order, made following the trial of the court proceeding or the parties' settlement, following which the only recourse open to a dissatisfied party is to appeal. See "appeal," "consent order," "decision" and "declaration." that provides otherwise and except as set out in this Part and Part 6 [Pension Division],
the definitions of "family property" and "family debt," and what is excluded from family property, the rules for how the division of property and debt are to be accomplished, and the exceptions to those rules, orders for the division of property and debt, and the circumstances when the court can divide family property unequally or divide excluded property, and
Family property is defined at s. 84(1) as all of the property owned by either or both spouses on the date of their separation. Family property includes property that is bought after separation with family property, for example if a spouse uses money from a joint bank accountIn law, a lawyer's bill to his or her client or a statement; one person's recollection of events. to buy a new car, after separation, the new car will be family property.
(a) a share or an interest in a corporation; (b) an interest in a partnership, an association, an organization, a business or a venture; (c) property owing to a spouse
(ii) in return for the provision of a good or service; (d) money of a spouse in an account with a financial institution; (e) a spouse's entitlement under an annuity, a pension, a retirement savings plan or an income plan; (f) property, other than property to which subsection (3) applies, that a spouse disposes of after the relationship between the spouses began, but over which the spouse retains authority, to be exercised alone or with another person, to require its return or to direct its use or further disposition in any way; (g) the amount by which the value of excluded property has increased since the later of the date
(ii) the excluded property was acquired. (3) Despite subsection (1) of this section and subject to section 85 (1) (e), family property includes that part of trustIn law, a form of possession of property in which a "trustee" keeps and manages property for the benefit of another person, the "beneficiary." The trustee holds the property ''in trust'' for the beneficiary. See "constructive trust," "ownership," "possession" and "resulting trust." property contributed by a spouse to a trust in which
(a) the spouse is a beneficiaryA person for whom a trustee holds a trust; the recipient or intended recipient of property given in a will. See "heir," and "trust.", and has a vested interest in that part of the trust property that is not subject to divestment, (b) the spouse has a power to transferIn law, the act of an owner of a thing giving ownership of that thing to another person, in exchange for money or other property in the case of a sale or in exchange for other rights in the case of a family law agreement. See "family law agreements," "ownership" and "sale." to himself or herself that part of the trust property, or
(c) the spouse has a power to terminate the trust and, on termination, that part of the trust property reverts to the spouse. Boiling this all down somewhat, family property includes:
a spouse's business, regardless of the nature of the business interest, money owed to a spouse, bank accounts, savings accounts, investment accounts and pension accounts, family property that a spouse transferred after separation but can get back, and
In other words, all of the debt accumulating from the date the spouses began to live together or got married, whichever is earlier, to the date of separation is family debt. Family debt includes debt that is incurred after separation if the debt was incurred for family property, for example if a spouse takes out a loan to make the mortgageThe conditional transfer of the title to real property by an owner to another person in return for money given as a loan, while retaining possession of the property. The party to whom title is given, the "mortgagee," usually a bank, is allowed to register the title of the property in his or her name if the person taking the loan, the "mortgagor," fails to make the required payments. See "encumbrance" and "real property." payments on the family homeIn family law, the dwelling occupied by a family as their primary residence. See "family property" and "real property.". Since the family home is family property, the loan is a family debt that both spouses are responsible for.
When the spouses separate, all of the family property owned by either or both spouses becomes equally owned by both spouses as tenants in common. If only one spouse owns an asset, both of the spouses become equal owners of the asset as tenants in common. If both spouses own an asset as joint tenants, the joint tenancyA form of property co-ownership in which each joint tenant has a right of ownership of the whole property that is indistinct from the ownership rights of the other joint tenants. See "tenancy in common." is severed and both of the spouses become equal owners of the asset as tenants in common. This is all a bit complicated to explain, so please bear with me.
When two or more people own a thing as joint tenants, they are each owners of the whole thing. This is a fuzzy kind of shared ownershipA legal right to have a thing that is enforceable in court. See "possession." because the interests of one owner can't be separated out from the interests of the other because they each own the whole thing. To put it another way, a joint tenant doesn't own a particular slice of the pie, a joint tenant owns the whole pie.
When a joint tenant dies, his or her interest in the asset disappears, and the surviving joint tenants continue to own the whole asset as they always had. As a result, joint tenancies are extremely handy estateThe personal property and real property that a person owns or in which he or she has an interest, usually in connection with the prospect or event of the person's death. planning tools.
Because each owner's interest is separate from the other owners, a tenant in common can sell his or her share in the asset to someone else, put a mortgage on his or her interest or use it as collateral, or give it to someone else as a giftA voluntary transfer of property from one person to another, without expectation of payment or reward. Gifts to one spouse do not usually qualify as family property, and are excluded from the pool of property to be divided. See "donee," "donor," "excluded property," and "family property.". If a tenant in common dies, his or her interest in the thing becomes a part of his or her estate to be distributed according to his or her will.
The effect of the Separation
From a family law perspective, the most important thing about owning an asset as tenants in common, which is how assets are owned after the spouses separate, is this idea of two separate interests in an asset. Say the family home is registered in only one spouse's name and that spouse goes bankrupt. If there has been a separation and each spouse takes a one-half interest as a tenant in common, the only part of the house that can be taken by the bankrupt's trusteeA person who holds property in trust for the benefit of another person. See "trust." is the bankrupt's one-half interest; the other spouse's interest in that asset will be preserved from the bankrupt's creditors, and it doesn't matter who owns the asset on paper. This can be hugely important.
Family law lawyers describe the effect of a separation as "crystallizing" the spouses' interests in the family property because the separation makes each spouse the legal owner of one-half of the family assets in a way that is also bindingIn law, a requirement or obligation to honour and abide by something, such as a contract or order of the court. A judge's order is "binding" in the sense that it must be obeyed or a certain punishment will be imposed. Also refers to the principle that a higher court's decision on a point of law must be adopted by a lower court. See "contempt of court" and "precedent." on people outside the relationship, like creditors, trustees in bankruptcy, potential purchasers and so forth. After a separation happens, all a creditor can lien or seize to secure or pay a debt is the debtor's half-share of an asset, regardless of whether the debtor was the sole owner or the joint owner of the asset before the separation.
The valuation of property and valuation date
Although the pool of family property to be shared between spouses is crystallized when the separation happens, under s. 87(b), the value of the family property is not fixed until the date of the trialThe testing of the claims at issue in a court proceeding at a formal hearing before a judge with the jurisdiction to hear the proceeding. The parties present their evidence and arguments to the judge, who then makes a determination of the parties' claims against one another that is final and binding the parties unless appealed. See "action," "appeal," "argument," "claim," "evidence" and "jurisdiction." or agreement that divides the property. This makes sense, because it can take two or three years for the division of property to wrap up at a trial, and it can take four of five months to finish an agreement for the division of property.
The definition of family property at s. 84 starts from the assumption that all property either or both spouses own on the date of separation is shareable family property. Under s. 85(2), the spouse who claims that an asset should be excluded from the pool of family property is responsible for proving that the asset is excluded property. Excluded property is defined at s. 85(1):
(1) The following is excluded from family property: (a) property acquired by a spouse before the relationship between the spouses began; (b) gifts or inheritances to a spouse; (c) a settlementA resolution of one or more matters at issue in a court proceeding or legal dispute with the agreement of the parties to the proceeding or dispute, usually recorded in a written agreement or in an order that all parties agree the court should make. A court proceeding can be settled at any time before the trial. See "action," "consent order," "family law agreements" and "offer." or an award of damagesAn award of money payable by one party to a court proceeding to another, usually as compensation for loss or harm suffered as a result of the other party’s actions or omissions. In family law, damages are usually awarded to one party in compensation for breach of contract or spousal abuse. See "breach of contract" and "tort." to a spouse as compensation for injury or loss, unless the settlement or award represents compensation for
(ii) lost income of a spouse; (d) money paid or payable under an insurance policy, other than a policy respecting property, except any portion that represents compensation for
(ii) lost income of a spouse; (e) property referred to in any of paragraphs (a) to (d) that is held in trustA phrase describing how property is held by one person for the benefit of another person who is ultimately entitled to the use or proceeds of sale of that property. Money held ''in trust'' is held in a lawyer's bank account on the lawyer’s promise not to use that money except as may be agreed. for the benefit of a spouse;
(i) to which the spouse did not contribute, (ii) of which the spouse is a beneficiary, and
(iii) that is settled by a person other than the spouse; (g) property derived from property or the disposition of property referred to in any of paragraphs (a) to (f).
gifts, inheritances, court awards, insurance payments, and
Perhaps most importantly, under s. 85(1)(g), excluded property includes property bought during the relationship with excluded property. Say, for example, that a spouse receives an inheritanceReal property or personal property received as a result of the provisions of a will or the ''Estate Administration Act''. Inheritances do not usually qualify as family property subject to division between spouses. See "family property," "real property" and "will." of $10,000 and buys a collection of vintage Pyrex. The Pyrex collection would be that spouse's excluded property because it was bought with excluded property, even if the Pyrex collection was used in the day-to-day course of the couple's life together. Remember, whether something was "ordinarily used for a family purpose" is not a consideration under the Family Law Act.
However, where a married person puts what would be excluded property in the name of the other spouse, it may be that the excluded property becomes family property. Similarly, where a parentIn family law, the natural or adoptive father or mother of a child; may also include stepparents, depending on the circumstances and the applicable legislation; may include the donors of eggs or sperm and surrogate mothers, depending on the circumstances and the terms of any assisted reproduction agreement. See "adoptive parent," "natural parent" and "stepparent." gives money or property during the relationship it is open to the son-in-law or daughter-in-law, or the common lawThe legal principle under which courts are bound to follow the principles established by previous courts in similar cases dealing with similar facts. The system of justice used in non-criminal cases in all provinces and territories except Quebec. spouse, to argue that it was a gift to the couple and is not excluded property.
Taking stock at the beginning of a relationship
As you can see, it's rather important to know what you owned when you and your spouse began to live together. If you are just starting a relationship, here's what you do. First, gather the documents listed below for the period that spans the date on which you and your spouse began to live together or got married, whichever is earlier:
statements for all financial accounts, including savings accounts, investment accounts, RRSP accounts and other retirement savings accounts, statements for any workplace pension plans,
statements for all credit accounts, including credit cards, loans, mortgages and lines of credit, your personal income tax return, complete with all of the schedules and attachments, your BC Assessments for all real propertyA parcel of land and the buildings on that land. See "chattel," "ownership" and "possession.", or, if you want to be more accurate than that, proper appraisals, black book values or dealer quotes for any vehicles you own, appraisals for works of art and collections, and
Keeping track during a relationship
shows the dates and amounts of any inheritances, gifts, court awards and insurance proceeds received during the relationship, tracks money received from the saleAn agreement to transfer the ownership of property from one person to another in exchange for the reciprocal transfer of something else, usually money. See "agreement." of excluded property, and what you did with the money, particularly if the money was pooled with your spouse's money to buy something, tracks property bought in exchange for excluded property, shows the intent of any gift or transfer of property, and
Who got what under the Family Relations Act
they started a court proceeding to divide property before 18 March 2013, the date when the Family Law Act came into effect, a spouse wants to start a court proceeding to enforce or set aside an agreement about property that was signed before 18 March 2013.
The division and distribution of property between married spouses was governed by Parts 5 and 6 of the Family Relations Act. Part 5 of the act dealt with the division of property, including personal propertyChattels, goods, money; property other than real property. See "chattel" and "real property.", financial assets, and real estate. Part 6 dealt with the division of pensions. Unmarried couples, including couples who qualify as unmarried spouses, were expressly excluded from the parts of the act that deal with property.
Property owned by one or both spouses and ordinarily used by a spouse or a minorA person who is younger than the legal age of majority, 19 in British Columbia. See "age of majority." child of either spouse for a family purpose is a family asset.
To summarize, when a marriage breaks down, the spouses are presumed to own all family assets equally, no matter whose name the asset is in or whether the asset was brought into the marriage by one spouse or bought during the marriage. This presumption, however, only applies between spouses. As far as the rest of the world was concerned, the only owner of an asset is the person with legal titleIn law, a document demonstrating ownership of a thing. See "ownership." to the asset, which might be:
one of the spouses, both spouses as joint tenants, both spouses as tenants in common, or
when the parties made and signed a separation agreementA contract intended to resolve all or some of the issues outstanding following the breakdown of a relationship and intended to guide the parties in their dealings with one another thereafter. A typical separation agreement is signed following a settlement reached through negotiations and deals with issues including guardianship, parenting arrangements, contact, support, the division of property and the division of debt. See "family law agreements.", when the court made a declaration that the spouses had no reasonable prospect of getting back together and resuming married life, when the court made an order for divorce, and
The equal and unequal division of family assets
Under s. 56 of the Family Relations Act, each spouse was presumed to have a one-half interest in all family assets. This was, however, only a presumption, a presumption that could be challenged. When assets were divided more in one spouse's favour than the other, the assets were said to have been reapportioned. The court could order, or the spouses could agree, that all of the family assets would be reapportioned or that just a few assets would be reapportioned. This might have happened to allow one partyIn law, a person named as an applicant, claimant, respondent or third party in a court proceeding; someone asserting a claim in a court proceeding or against whom a claim has been brought. See "action" and "litigant." to keep more of a pension or more of an inheritance, for example, even though all the other family assets might have been divided equally.
(f) any other circumstances relating to the acquisition, preservation, maintenanceIn family law, an antiquated term referring to child support and spousal support. See "child support" and "spousal support.", improvement or use of property or the capacity or liabilities of a spouse
the marriage was short, say less than six or seven years, and one of the spouses brought the majority of the assets into the relationship, one of the spouses was responsible for racking up a lot of debts not related to spending for family purposes, some of the assets were located outside of British Columbia, one of the spouses required more than half of the family assets to become financially independent, one of the spouses had wrongfully disposed of family assets or negligently allowed them to decrease in value, especially if this happened after separation, or
Defining "family assets"
These agreements are often used to say how property and debt will be handled during a relationship and how it will be allocated if the couple separates. Under s. 93(1) of the Family Law Act, they must be in writing and be signed by each spouse in the presence of at least one other person as witnessA person with person knowledge of things; a person giving oral evidence in court on oath or affirmation as to the truth of the evidence given. See "affirm," "evidence," "oath" and "opinion evidence.".
However, since many people are content with the basic plan for the division of property set out in the Family Law Act, the question is often about what a cohabitation agreementAn agreement signed by people who are or have begun to live together in a marriage-like relationship that is intended to govern their rights and obligations in the event of the breakdown of their relationship and, sometimes, their rights and obligations during their relationship. See "family law agreement." or a marriage agreementAn agreement signed by people who are planning on marrying or have married that is intended to govern their rights and obligations in the event of the breakdown of their marriage and, sometimes, their rights and obligations during their marriage. See "family law agreement." can do that would be better than the division the act expects. Here are some ideas. An agreement could:
allow a spouse to keep not just his or her excluded property but the growth in value of his or her excluded property, say that there will be no shared family property, except for property that is registered in both spouses' names or that the parties agree in writing will be shared family property,
give a share of a spouse's excluded property to the other spouse, including a share which increases over time, make all excluded property shareable family property, say how property bought during the relationship will be owned if it's bought with both spouse's excluded property, or
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