Over the course of a relationship, most couples amass a significant amount of property. Some are purchased jointly, some personally. If a divorce occurs, the thorny question of how that property is divided is often the first thing we’re asked as family lawyers. In this blog, we’re going to explain the usual legal process for how property is divided after a divorce.
First, let’s look at the two types of property in the eyes of the law.
Family Property and Excluded Property
When it comes to a divorce, property is categorized in two ways:
- Family Property
- Excluded Property
Family Property is defined as everything you or your spouse acquired separately (or together) during the period of your cohabitation and/or marriage. It doesn’t matter whose name is listed as the owner, or what contribution each spouse made to the acquisition of the property.
Common assets which couples have upon separation are:
- The family home
- Other land or property assets
- Bank accounts
- Insurance policies
Often, especially if a relationship lasted for a long time, many of these assets will have been acquired during the relationship and will be considered Family Property. *But note that where any of the above fall into the category of Excluded Property, or can be shown to have been derived from Excluded Property, they will not be considered Family Property. A single asset could be partially Family Property and partially Excluded Property, which is discussed further below. Excluded Property is defined as property either spouse owned before you lived together or got married, as well as property which falls into the categories listed below (even if acquired during the cohabitation and/or marriage). This property does not need to be split equally upon separation, with very few exceptions.
Common types of Excluded Property include:
- Property owned before the relationship started
- Insurance proceeds and Damages awards for personal injury, except compensation for wage loss
- Some types trust property
In British Columbia, the rules about the division of Family Property apply equally to married couples and unmarried couples who have been living together for at least two years. In both scenarios, all Family Property will be shared equally, unless the couple has previously created a separation agreement that states differently, or one of several extenuating circumstances apply which allows a court to divide Family Property unequally.
Important Note Regarding Excluded Property
There is an important point to consider when looking at Excluded Property in a divorce. While property owned before the relationship commenced is considered Excluded Property, if the value of that property increased during the marriage, that increase in value is considered Family Property. For example, say one partner owns a home worth $400,000 when the spouse moves in. Upon separation, the original home owner is entitled to keep the $400,000, but the additional $100,000 in equity would be considered Family Property and divided equally.
How Debt is Handled
Debt is also considered Family Debt upon divorce. Both spouses are responsible for 50% of a debt upon divorce, with some exceptions. This is important to note, and not something most people are aware of.
Here to Help
As family law experts, the team at Westside Family Law has been a trusted advisor to countless clients going through the difficult divorce process. Need assistance with any aspect of dividing property during a divorce? Contact us and we’ll be happy to assist.