Couples going through a divorce or separation face an emotionally challenging time. It is perfectly normal for feelings of anger, sadness and exhaustion to rise to the surface. There’s also the growing sense of uncertainty about the future to consider. Against this backdrop, important issues need to be decided, such as the division of assets a couple has accrued during their relationship. This often-contentious issue has the potential to further damage an already strained relationship, and impact negatively upon any children that are involved.
Luckily, a legal framework exists that provides clarity on how these assets are typically divided. Obviously, some exceptions can happen, so it’s always critical to get advice from a family law expert like the team at Westside Family Law. Let’s examine how the law approaches the division of assets.
Dividing Property and Debt Upon Divorce or Separation
In British Columbia, the property and debt division framework is governed by the Family Law Act. Couples will typically split any property that is acquired during their relationship equally. Any property that is brought into the relationship by one of the parties is usually excluded, although the increase in the value of that property over the course of the relationship is usually divided equally.
The same principles apply to debt division: any debt that is acquired during the relationship will typically be split equally and any debt that is brought into the relationship by one of the parties is usually excluded, although any interest accrued on the debt over the course of the relationship is usually divided equally.
It is worth noting that if a couple wishes to divide their property or debt in a different manner, they can opt-out of this arrangement in advance by signing an agreement.
A common misconception about this division of property and debt is that it only applies to married couples. This is not the case. In fact, the rules also apply to unmarried couples who have lived together in a marriage-like relationship for at least two years. This arrangement is sometimes referred to as a common-law couple.
Explaining Family Property and Excluded Property
For the purposes of property division, BC Law categorizes property in two ways:
- Family Property; and
- Excluded Property
Many disagreements we see during the divorce process revolve around different interpretations of what constitutes family property, and what is excluded property. Let’s examine how the Province of BC typically defines both.
Common Types of Family Property
Family property is often all property owned by the spouses when they separate. The following assets are often considered family property and are generally divided equally among both spouses upon separation or divorce:
- The family home;
- Bank accounts;
- Insurance policies;
- Interest in a business; and/or
- The amount of any increase in the value of excluded property since the relationship started.
Common Types of Excluded Property
Excluded property is property that is not considered family property. It can include property that was acquired before the relationship began or even certain property that was acquired during the relationship. During a divorce or separation, excluded property is excluded from the rule that property must be divided equally. Some common types of excluded property include:
- Property owned by one spouse before the relationship started;
- Gifts and inheritance given to one spouse during the relationship; and/or
- Some damage awards, insurance proceeds and trust property.
What Happens to Family Debt?
When spouses separate, all family debts are shared equally, unless the couple has previously signed an agreement stating something else. Family debts are often debts that have been acquired during the relationship. Common types of family debt include:
- Mortgages on homes;
- Loans taken out jointly;
- Lines of credit, overdrafts and credit cards;
- Income tax debts; and/or
- Repair costs for property.
Contact a Lawyer
It is important to note that property and debt division are not always as simple as this blog post may make it seem. There can be all sorts of issues that arise. It is recommended that parties seek legal advice when considering how to divide their property and debt. The team at Westside Family Law has been a trusted advisor to countless clients going through the difficult separation process. Contact Us if you need any assistance with dividing property and debt.