Family Law Blog

How are Assets Distributed in a Divorce?

How are Assets Distributed in a Divorce?

When a couple reaches the difficult decision to divorce, one of the first questions they consider is how are assets distributed in a divorce? As experts in family law, we’ve helped countless clients navigate the process, and the division of assets can sometimes be a contentious issue. Thankfully, we have a legal framework and precedent to work within.

In this week’s blog, we’ll be examining how assets are distributed in a divorce in British Columbia.

How the Law Approaches Asset Distribution

Under British Columbia’s Family Law Act, property owned by a married couple is divided into two categories: Family Property and Excluded Property. Family Property is typically divided 50/50 between spouses with one important caveat: unless it is significantly unfair to do so. Before the process begins, the divorcing couple, and their legal representatives, must first determine what constitutes Family Property, and what is Excluded Property. 

Check out one of our earlier blogs on the Division of Property in Divorce for a full breakdown on the differences between the two types of property.

Once Family Property and Excluded Property are determined, the specific distribution of these assets can vary quite significantly and it’s possible to satisfy each person’s interest in equity in various ways. At this point, it’s worth mentioning that it’s highly recommended to work with a family law expert like the team at Westside Family Law, as this part of the process is open to quite a bit of legal interpretation. 

Here are some common scenarios we see that add wrinkles to the process of dividing property. 

The Family Home

The Family home is regarded as Family Property. However, it can (and usually does) go to one person, with the other being bought out, or receiving assets of equal value which are also family property. This can include stocks, funds in a savings account, or other financial assets.

If there aren’t enough assets to compensate one party for their interest in a property the other wishes to keep, the property will generally have to be sold, and the proceeds of the sale divided in accordance with each person’s interest.

Coming to an Agreement

Plenty of separating couples will look to come to an arrangement over aspects of Excluded Property or Family Property they typically wouldn’t have a claim on. For example, the party who owns the Excluded Property will usually retain that property itself, but parties are free to agree to do otherwise, if they can arrange for the party that owns the excluded property to be compensated for its value.

There is always scope for negotiation in the distribution of assets. If these talks don’t result in any progress, parties can seek the assistance of the court. This scenario is common when two parties can’t agree on what constitutes Family and/or Excluded Property. 

If the disagreement is a matter of resolving how each party gets their agreed upon interest, it’s unlikely that court assistance will be required. 

An Important Note on Debt in a Divorce

While we’ve spent this blog considering assets and how they’re divided in a divorce, debt is an important consideration for couples separating. In fact, both spouses are responsible for 50 per cent of a debt upon divorce. Obviously, some exceptions to this exist but it’s an important aspect many individuals fail to consider.

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.