What happens to family property when spouses separate?
How property is divided
In B.C., the rules about the division of family property apply to both married couples and unmarried couples who have been living together in a marriage-like relationship for at least two years.
There are two categories of property:
- Family property
- Excluded property
When spouses separate, all family property is shared equally, unless the couple has an agreement that says something else.
Family property is everything that you or your spouse owned separately or together on the date you separate. It does not matter whose name the family property is in.
Family property includes:
- The family home
- Bank accounts
- Insurance policies
- An interest in a business
- The amount of any increase in the value of excluded property since the relationship started
Some things are not considered family property. They are excluded from the rule that the property must be divided equally.
Excluded property includes:
- Property one spouse owned before the relationship started
- Gifts and inheritances given to one spouse during the relationship
- Some kinds of damage awards, insurance proceeds and trust property
But if the value of excluded property increased during the relationship, that increase in value is considered family property and is divided equally.
For example, suppose you owned a house worth $300, 000 when your spouse moved in. Together, you paid the mortgage, did renovations and the housing market went up. As a result, when you separated, the value of the house had increased to $500,000. You would keep the original $300,000 and you and your spouse would share the extra $200,000 of the increased equity.
If a couple wishes to divide their property or debt differently, they can make an agreement.
Most of the time, excluded property cannot be divided at all. But in very limited cases, such as long interdependent relationships or where family property is located outside B.C. and cannot be easily divided, excluded property could be divided to make sure each spouse gets a fair outcome.
When property can be divided unequally
A court will divide family property or debt unequally only if it would be “significantly unfair” to divide it equally. This means that a court will not order an unequal division in most cases. The court can look at a number of factors when deciding whether to divide property or debt unequally.
As well, a couple can divide their property or debt unequally by making an agreement.
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