The division of property (assets and debts) in British Columbia is governed by the Family Law Act; regardless of marital status. The starting point is that all property in the names of either or both spouses is family property, with a presumption of equal division. Any property acquired prior to cohabitation or to a specific spouse after cohabitation, to the exclusion of the other spouse, or in limited other circumstances, is excluded property, with no presumption of equal division. Any growth in the value of property after cohabitation is to be equally shared by the spouses, including the growth in value of most excluded assets, unless there is an agreement or court order to the contrary.
There are two important steps to take when dividing assets and debts amidst a divorce or separation.
1. Identify your assets and debts
During a separation, it is important for the parties to identify their assets and debts at the time of separation. It is important to note all of the assets, in case any are sold, transferred or hidden during the division process, even though the time of valuing most assets is on the date they are divided in the future. It is arguably more important to identify all of the debts, as the division of debts is to be done based on the amount owing on the date of separation, unless the debt(s) existed prior to cohabitation or is used to preserve family property (i.e. both parties share in any increase of a mortgage due to non-payment after separation).
It is important to keep in mind that the court always retains the right to deviate from the above starting points in the law.
2. Consult with a professional
Upon determining family assets and debts and the value of each, after removing any excluded assets or debts, you will be able to make a rough determination of the net value of family property to be divided (assets minus debts) (the “NFP”). Each side could then expect to have a financial net worth of half of the NFP, plus or minus any excluded assets or debts that belong to either spouse.
Upon dividing family property, either spouse will retain certain assets and certain debts. In order to achieve fairness, the spouse who retains more NFP will pay half of the difference to the other spouse, in what is referred to as an equalization payment.
Can I opt-out of B.C.’s property division rules?
The Province’s property and debt division rules apply to married couples, and unmarried couples who have lived together in a marriage-like relationship for at least two years. If a couple wishes to divide their assets or debts differently, it is possible to opt-out of the asset and debt division rules through a written agreement, often referred to as either a cohabitation agreement, a pre-nuptial agreement, or a marriage agreement.
The time limit to apply for a court order in regards to dividing family property is within two years after the order of divorce in the case of a married couple, and two years after the date of separation in the case of a marriage-like relationship; often referred to as a common-law relationship.
CBM Lawyers are proud to offer our clients a wide range of legal services that include the handling of all family matters, including division of assets and debts, as well as matters dealing with estates, wills and trusts. If you are divorcing from your spouse, and are unsure how to proceed with allocating family and excluded property, we are here to provide you with the best legal advice available.
For more information or to seek counsel for your own situation, contact our team today.
