Surrey Property and Debt Division Lawyers
Dividing Property and Debts After You Separate in BC
One of the main matters to settle during separation and divorce in British Columbia is the division of property and debt.
Depending on the amount of property, the length of the relationship, and the level of conflict during the separation, the division of assets during divorce can be a complex legal process, often requiring the experience and guidance of a property division lawyer.
The laws concerning marital and excluded property, debt, and other connected matters apply equally to married spouses and those in common-law (marriage-like) relationships in B.C.
Here is what you need to know if you need to divide property and debt and are unsure where to start.
What is considered “family property” in BC?
“Family property” is the name given to any assets or debts considered part of the relationship’s “estate” on the date of separation. This is distinct from “excluded” or separate property.
Family property generally includes the following types of assets:
- The family home
- Savings accounts
- Investments (stocks, shares, etc.)
- Businesses
- Pensions
- Retirement accounts
- Vehicles
- Valuable collections (jewelry, art, etc.)
- Insurance policies
- Pets
It should be noted that family property also includes the increase in value (since the relationship started) of any assets considered “excluded” property. So, for example, if a house you owned before marriage was worth $250,000 when the marriage started and $400,000 on the date of separation, the increase in value of $150,000 would be subject to BC’s property division regulations.
Also, note that British Columbia’s family property rules apply regardless of whose name is on the title of the asset.
What is “excluded property” in a BC separation?
If a relationship breaks down (marriage or common-law relationship) in BC, certain assets and debts may be considered “excluded” from the property that must be divided under the provisions of the Family Law Act.
These include anything owned before the relationship started, as well as certain other assets, such as:
- Inheritance intended only for one spouse
- Gifts intended only for one spouse
- Payouts from personal injury settlements
This “excluded” property remains excluded from the process of dividing property and debt even if it ends up in jointly owned assets.
If, for instance, one spouse inherits $200,000 that is used to purchase a property held in joint names with the other spouse, the $200,000 remains the exclusive property of the original owner of the inheritance money if the couple separates—provided the investment can be traced back and proven.
This can be easier said than done unless you retain accurate records. Often, it requires the assistance of a qualified property division lawyer to unravel and prove who owns what.
How are family property and debt divided in BC?
Under the provisions of the Family Law Act, family property is divided equally in British Columbia—though if a claim is made, the courts have some latitude to order a slightly different division if a 50/50 split would be significantly unfair to either spouse.
Any family debt is also divided equally as part of the overall calculation, regardless of whose name is on the debt. Family debt might include a mortgage, bank loans/loans from family members, overdrafts, credit cards, income tax debts or repair bill debts.
Actually, separating couples can divide property and debt any way they choose—if they agree with each other. If they do not have a separation agreement and a claim is made, the courts will need to unravel the financial picture and then decide how a fair division of property can be accomplished.
Of course, not all assets are “liquid” and can be easily divided, so the process can be complex. It usually helps to have a property division lawyer assist with the division process and/or represent your best interests in court.
Spouses have two years from the date of a divorce order to file a property division claim with the BC courts while common-law partners have two years from the date of separation.
Can a creditor make you repay your ex-spouse’s debt?
Generally speaking, if there are outstanding debts from a marriage, a creditor can only legally claim repayment of the debt from the person who signed for it. Joint debts are usually claimed from one spouse.
Separated couples in B.C. should take steps to separate their finances from the date of separation onwards. This might include:
- Writing to creditors to inform them of the separation.
- Cancelling any secondary credit cards where you are the primary cardholder.
- Seeking advice about how to protect the funds in any joint accounts you hold.
- Reducing the limits on any overdrafts or lines of credit that you have a say in and which your spouse has access to.
- Requesting if the terms of any joint accounts can be changed so that two signatures are required to withdraw money.
- Creating a bank account in your name only—and using that account for any transactions going forward.
- Opening a line of credit in your name only if you do not already have this.
When can family property/debt be divided unequally in BC?
Spouses can divide property equally or unequally as long as they agree—but courts will follow careful procedures to achieve a fair distribution if asked to rule.
In some circumstances, dividing family property and debt down the middle is not considered a fair distribution. A judge may order an uneven division to prevent a significantly unfair distribution that penalizes one of the spouses.
For instance, in relationships where one partner has been a “homemaker” and sacrificed a career to raise the children, and is essentially unemployable, a judge may need to use a larger portion of the property (alongside spousal support) to ensure that single life does not result in financial hardship for the spouse.
In making these decisions, judges will consider the length of the relationship, whether any agreements were made between the spouses, how the property or debt was accrued, the role of each spouse in the relationship, and other factors.
Dividing your pension after separation in BC
As with all matters concerning dividing property and debt in BC, the rules for dividing pensions apply to married couples and those living together in a marriage-like relationship for at least two years.
The portion of a pension earned during the relationship must be included as part of the family property calculation, which can get very complicated. It is generally best to seek the assistance of a seasoned property division lawyer when attempting to work this out.
For a free, 30-minute consultation about your legal options regarding the division of assets & debt during divorce or separation, contact the Surrey family lawyers at Legalbird today.