Dividing Family Property in BC: What Is Shared and What Is Excluded

Most separating couples in British Columbia want to know two things about money: what will be shared, and what each of them keeps. The Family Law Act answers both with a starting point of equal sharing and a defined list of exceptions.

This guide explains how that works for married spouses and for unmarried spouses who lived together in a marriage-like relationship for at least two years, and where disputes most often arise.

Who these rules apply to

The property division rules in Part 5 of BC's Family Law Act apply to married spouses and to unmarried spouses who lived together in a marriage-like relationship for at least two years. For property, having a child together does not shorten the two-year requirement, although it can for spousal support. The relationship begins on the day you started living together in a marriage-like relationship or married, whichever came first.

If you were not married, our article on common-law separation and the two-year rule looks at the questions particular to unmarried couples.

The starting point: equal sharing

Unless an agreement or court order says otherwise, both spouses are entitled to family property and responsible for family debt, regardless of who used it or contributed to it. On separation, each spouse has a right to an undivided half interest in all family property, as a tenant in common, and is equally responsible for family debt. This is the 50/50 split people often hear about.

Whose name is on the title or the account does not decide the question. Spouses can agree to a different division, and many do so in writing; our guide to separation agreements explains what one can settle and when a court can set one aside.

What counts as family property

Family property is generally all property owned by at least one spouse on the date of separation, plus property acquired after separation that is derived from it, unless it is excluded property. It includes, for example:

• the family home and other real estate
• shares or an interest in a corporation, and interests in a partnership or business
• money in bank accounts, and money owing to a spouse, such as a tax refund
• entitlements under pension plans, retirement savings plans, annuities and income plans
• property a spouse transferred to someone else after the relationship began but can still require to be returned, or whose use the spouse can still direct
• the growth in value of excluded property, discussed below.

Excluded property, and who must prove it

Section 85 sets out what is excluded. The main categories are:

• property a spouse acquired before the relationship began
• inheritances to a spouse, and gifts to a spouse from a third party
• a settlement or damage award to a spouse for injury or loss, except any part that compensates both spouses or replaces lost income
• insurance proceeds, other than under a policy respecting property, with the same exceptions
• excluded property of these kinds held in trust for a spouse, and a spouse's interest in a discretionary trust that the spouse neither contributed to nor settled
• property derived from any of these, for example a car bought with inherited money.

Two rules narrow these exclusions. First, any increase in the value of excluded property since the relationship began, or since it was acquired if later, is generally family property. If you owned a condo before moving in together, its value at the start may be excluded, but the growth since then is generally shared. Second, the spouse who says property is excluded has to prove it. That usually means documents, such as statements and appraisals. Excluded money deposited into a joint account or used to pay down a shared mortgage can be hard to trace.

Family debt and valuation

Family debt generally includes all financial obligations a spouse incurred from the start of the relationship to separation, and debt incurred after separation to maintain family property. It is shared equally, like family property. Sharing debt between spouses does not change what you owe a lender.

What counts as family property is fixed at the date of separation, but its value is not. Unless an agreement or order says otherwise, family property is valued at fair market value as of the date of an agreement dividing it, or of the court hearing. If the home rises or falls in value while you negotiate, that change is generally shared.

When division can be unequal

A court can divide family property or debt unequally only if equal division would be significantly unfair. The factors include:

• the length of the relationship
• the terms of an agreement between the spouses
• one spouse's contribution to the other's career or career potential
• whether family debt was incurred in the normal course of the relationship
• where family debt exceeds family property, each spouse's ability to pay
• a spouse causing a significant change in value after separation, beyond market trends
• a spouse, not acting in good faith, substantially reducing the value of family property
• tax a spouse may have to pay because of a transfer or sale of property.

Excluded property is divided even more rarely. A court can divide part of it only where family property outside BC cannot practically be divided, or where it would be significantly unfair not to, considering factors such as the length of the relationship and a spouse's direct contribution to preserving, maintaining, improving, operating or managing it.

Pensions and the two-year deadline

Pension entitlements are family property, but they are divided under a separate process in Part 6 of the Act, which sets how a spouse's share is determined and is usually carried out through the plan administrator. Depending on the plan, a spouse may become a limited member and receive their share as a separate pension. Plans governed by another jurisdiction's law can follow different rules.

A Family Law Act claim to divide property, family debt or a pension must be started within two years after separation for unmarried spouses, or after the divorce order (or a nullity order) for married spouses. The clock is suspended during family dispute resolution with a family dispute resolution professional, such as a qualified family mediator, or another prescribed process, but informal talks should not be assumed to stop it. A challenge to a property agreement has its own two-year limit, counted from when the grounds were, or reasonably should have been, discovered. If you have just separated, our first-steps checklist for separating in BC sets out what to do first.

Once a division is agreed, transferring title to the home, any sale or refinancing, and an updated will are separate steps to plan for.

Separating? Know what is shared before you divide it

Our family lawyers can help you identify and value family property and debt, gather records to support an excluded property claim, and negotiate or review a property agreement, or represent you in court.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.