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Property Division

As time goes by…

If you were married, you must bring your claim for property division within two years of the date of your divorce. Unmarried spouses have two years from their date of separation (typically decided by when you stopped living together- but can be sooner). If you’re outside these limits, be sure to check with a lawyer before you throw in the towel – you could be eligible for property division under the common law (rather than the Family Law Act).

Can’t decide who gets to keep that china you got as a wedding gift?

If you and your spouse agree on how to split up your assets and debts, a separation agreement is probably the least expensive way of setting that in stone. If you and your spouse can’t agree about who gets what, the Family Law Act (FLA) is there to break it down for you. The act stipulates what kinds of property is excluded from division as a starting point (before getting into all the complicated exceptions). It also discusses how and when things should be divided equally, or in some cases, unequally. Your lawyer can help you understand some finer points of the FLA, such as whether or not you qualify as a spouse if you weren’t married (to be eligible for property division in the first place).

How it Works

The general principle under the FLA is that spouses are entitled to equally share in property acquiring during their relationship (from the date they started living together to the date of separation), and to keep any property they owned before the relationship began. The same goes for debt. You are equally responsible for debt accumulated during your relationship, but separately responsible for any debt that you brought into the relationship or incurred post-separation.

The presumption also states that you are to equally divide any increase to property that is otherwise excluded, such as property owned prior to the date of cohabitation.Since the assets (or debts) to be divided are determined as of the date of separation, agreeing on that date with your spouse quite important. If your ex claims you separated after he bought himself that new BMW on the joint visa, you could be on the hook for that debt. There are many exceptions to the above, so it is important to get legal advice for your situation.

Sharing is Caring

Anything accumulated during the course of your relationship is up for division. Bank accounts, pensions, personal credit card debt, the foosball table, the cat… you name it. Property purchased after separation using family property (i.e. drawing on a joint line of credit) also counts.

If you go to court, the Family Law Act (FLA) assumes that everything is family property, and the onus is on you to prove otherwise. If you can prove you purchased the foosball table using your own property (for example, that inheritance from your Aunt Mildred or that TFSA money you had saved pre-relationship), it could be excluded from the 50/50 split.

However, if you put Aunt Mildred’s inheritance into the joint family spending account and it went towards daily living expenses, the original amount of that gift may not be excluded from equal property division. We call that “losin’ your exclusion.” Again, property division is complex, so it is important to get legal advice.

What’s mine is yours and what’s yours was… never mine to begin with?

According to the Family Law Act (FLA), anything owned prior to a couple’s cohabitation (i.e. when they moved in together) is considered to be excluded property. However, the increase in value of that property becomes a joint asset after the couple has been cohabitating for two years. For example, if you owned a condo and then your spouse moved in with you, that does not make the condo a joint asset. However, if you lived there together for three years and then separated, and over that three years your condo increased in value from $200,000.00 to $250,000.00, your ex is potentially entitled to $25,000.00 worth of the equity ($50,000.00 divided in half).

Some examples of excluded property:

  • Inheritances
  • Certain insurance payments and court awards (for example, portions of an ICBC settlement)
  • Gifts from a third party to only you (unless it was actually a gift for the both of you… that  can get complicated)
  • Certain trust property

There are some limited circumstances in which the courts may deem equal property division inappropriate and order property division in favour of one party. First, the court would need to deem equal division “significantly unfair” – meaning, unjust. This is not always easy to accomplish, but it happens. This area is particularly complex, and it is best to discuss this with a lawyer.

Splitting CPP Credits

If you are an employee, you are accumulating Canada Pension Plan (CPP) credits with each payroll deduction. These credits are used to determine how much CPP benefit payment you should see every month after you turn 65 (or whenever you decide to take your pension).

If not otherwise specified in a final order or agreement, the CPP contributions made during the time you and your spouse lived together can be equally divided after a divorce or separation, even if one party did not make contributions to the CPP.

Credit splitting will affect any current or future benefits you receive under the CPP program for both you and your former spouse. To qualify for credit splitting, you and your former spouse must have lived together for 12 consecutive months, and you or your former spouse must notify Service Canada and provide the necessary information.

BC is one of the only provinces that allow separated couples not to equalize their CPP if they wish. But be aware, if this decision is never put into an order or agreement, either party can apply for credit splitting at any point (provided they were married. Unmarried couples have 48 months after separation to apply for a division).

+ Time Limits
As time goes by…

If you were married, you must bring your claim for property division within two years of the date of your divorce. Unmarried spouses have two years from their date of separation (typically decided by when you stopped living together- but can be sooner). If you’re outside these limits, be sure to check with a lawyer before you throw in the towel – you could be eligible for property division under the common law (rather than the Family Law Act).

+ How Property is Divided
Can’t decide who gets to keep that china you got as a wedding gift?

If you and your spouse agree on how to split up your assets and debts, a separation agreement is probably the least expensive way of setting that in stone. If you and your spouse can’t agree about who gets what, the Family Law Act (FLA) is there to break it down for you. The act stipulates what kinds of property is excluded from division as a starting point (before getting into all the complicated exceptions). It also discusses how and when things should be divided equally, or in some cases, unequally. Your lawyer can help you understand some finer points of the FLA, such as whether or not you qualify as a spouse if you weren’t married (to be eligible for property division in the first place).

How it Works

The general principle under the FLA is that spouses are entitled to equally share in property acquiring during their relationship (from the date they started living together to the date of separation), and to keep any property they owned before the relationship began. The same goes for debt. You are equally responsible for debt accumulated during your relationship, but separately responsible for any debt that you brought into the relationship or incurred post-separation.

The presumption also states that you are to equally divide any increase to property that is otherwise excluded, such as property owned prior to the date of cohabitation.Since the assets (or debts) to be divided are determined as of the date of separation, agreeing on that date with your spouse quite important. If your ex claims you separated after he bought himself that new BMW on the joint visa, you could be on the hook for that debt. There are many exceptions to the above, so it is important to get legal advice for your situation.

+ What Gets Divided
Sharing is Caring

Anything accumulated during the course of your relationship is up for division. Bank accounts, pensions, personal credit card debt, the foosball table, the cat… you name it. Property purchased after separation using family property (i.e. drawing on a joint line of credit) also counts.

If you go to court, the Family Law Act (FLA) assumes that everything is family property, and the onus is on you to prove otherwise. If you can prove you purchased the foosball table using your own property (for example, that inheritance from your Aunt Mildred or that TFSA money you had saved pre-relationship), it could be excluded from the 50/50 split.

However, if you put Aunt Mildred’s inheritance into the joint family spending account and it went towards daily living expenses, the original amount of that gift may not be excluded from equal property division. We call that “losin’ your exclusion.” Again, property division is complex, so it is important to get legal advice.

+ What is Not Divided
What’s mine is yours and what’s yours was… never mine to begin with?

According to the Family Law Act (FLA), anything owned prior to a couple’s cohabitation (i.e. when they moved in together) is considered to be excluded property. However, the increase in value of that property becomes a joint asset after the couple has been cohabitating for two years. For example, if you owned a condo and then your spouse moved in with you, that does not make the condo a joint asset. However, if you lived there together for three years and then separated, and over that three years your condo increased in value from $200,000.00 to $250,000.00, your ex is potentially entitled to $25,000.00 worth of the equity ($50,000.00 divided in half).

Some examples of excluded property:

  • Inheritances
  • Certain insurance payments and court awards (for example, portions of an ICBC settlement)
  • Gifts from a third party to only you (unless it was actually a gift for the both of you… that  can get complicated)
  • Certain trust property
+ Unequal Division

There are some limited circumstances in which the courts may deem equal property division inappropriate and order property division in favour of one party. First, the court would need to deem equal division “significantly unfair” – meaning, unjust. This is not always easy to accomplish, but it happens. This area is particularly complex, and it is best to discuss this with a lawyer.

+ Pensions
Splitting CPP Credits

If you are an employee, you are accumulating Canada Pension Plan (CPP) credits with each payroll deduction. These credits are used to determine how much CPP benefit payment you should see every month after you turn 65 (or whenever you decide to take your pension).

If not otherwise specified in a final order or agreement, the CPP contributions made during the time you and your spouse lived together can be equally divided after a divorce or separation, even if one party did not make contributions to the CPP.

Credit splitting will affect any current or future benefits you receive under the CPP program for both you and your former spouse. To qualify for credit splitting, you and your former spouse must have lived together for 12 consecutive months, and you or your former spouse must notify Service Canada and provide the necessary information.

BC is one of the only provinces that allow separated couples not to equalize their CPP if they wish. But be aware, if this decision is never put into an order or agreement, either party can apply for credit splitting at any point (provided they were married. Unmarried couples have 48 months after separation to apply for a division).