Who gets the family home after divorce? How are bank accounts, investments, or other assets split? Divorce proceedings in BC are grounded in the basic rule that property is divided equally between spouses. But do not let that deceptively simple rule mislead you – the division of property and assets in divorce proceedings can be quite complex.
BC divorce: Property division 101
Equal division is the starting point for divorce, property division, and the sharing of debt. When it comes to separation of assets, the asset in question must meet the definition of “family property” to be subject to the presumption that each spouse is to share equally. In BC, family property is defined as including all property owned by at least one or both spouses on the date the spouses separate. Family property can include real property (the family home, land, buildings, investment properties, cottages, etc.), shares in companies, an interest in a business, insurance policies, income tax refunds, bank accounts, investments, RRSPs and other pensions or retirement savings. It does not matter whose name family property is in, who used it, or who contributed to its purchase.
Divorce asset split: Here’s where it gets complicated
On divorce, separation of assets can be complicated once you move beyond the basic presumption that family property is shared equally between the spouses. Consider this:
- Family property can include property in which at least one spouse has a “beneficial interest,” regardless of whose name the property is in (i.e., a situation where legal title to property is held in someone else’s name for a spouse’s benefit).
- Certain assets are specifically excluded from the definition of family property. Property a spouse brought into the marriage is excluded, as are gifts, inheritances, court awards, and insurance payouts received by a spouse during the marriage. Property bought with excluded property during the marriage is also excluded.
- Each spouse is entitled to keep their own excluded property but must share half of the increase in value of any excluded property. In other words, if the value of excluded property increased over the course of the marriage, the increase in value is family property and is shared on divorce.
- Property division rules can be departed from if equal division would be significantly unfair. The court can order unequal division of property from the family (or family debt) based on factors such as the length of the relationship and whether one spouse caused a significant increase or decrease in the value of property post-separation.
- In addition to the BC courts having the power to order unequal division, the spouses themselves can agree to unequal division, or to treat excluded property as family property, etc. The agreement can be one made at the outset of the relationship (a Cohabitation Agreement or Marriage Contract) or when the relationship breaks down (a Separation Agreement).
- While the date the spouses separate is the date that family property is determined, the valuation of family property or the gain in value of excluded property can be complicated (e.g. a significant increase or decrease in the value of the family home or stocks). Disagreements about the valuation or change in value of property are common.
Ultimately, you want to protect your assets, leave your marriage in a healthy financial position, and achieve a result that is fair. For more information and solid legal advice, reach out to one of our experienced divorce lawyers.