Facing the complexities of property division, including hidden assets, might seem overwhelming. Our team of family lawyers in Vancouver is committed to aiding you in attaining a just and balanced resolution to your property division issues.
Dividing family property and debt at the end of a marriage or marriage-like relationship can be legally complicated and emotionally stressful. Mills Family Law will help ensure that family property and debt is divided equitably and efficiently.
In British Columbia, division of property and debt for married spouses and unmarried spouses who have lived together in a marriage-like relationship for at least two years (often referred to as “common law”) is governed by the Family Law Act (the “FLA”). The FLA distinguishes between “family property” and “excluded property.”
Family property is divided equally between spouses unless doing so would be significantly unfair. In British Columbia, family property includes all property that is owned, either legally or beneficially, by either spouse at the date of separation. Beneficial ownership means that legal title of property is held by someone else in trust for the benefit of a spouse. Family property also includes any additional property that is derived from family property after the date of separation. The increase in value of excluded property during the spousal relationship is also family property.
Excluded property is not divided between the spouses. Any property that was obtained prior to the relationship is excluded property. Exclude property also includes the following:
If you have significant assets that would qualify as excluded, you can take active steps to protect yourself before and during the relationship. Mills Family Law will help you avoid mistakes that result in the loss of excluded property.
If spouses disagree whether property is excluded, the onus of proving excluded family property in BC lies with the person wanting to claim the exclusion. The spouse must be able to show first that the property in question fits into a category of excluded property, and second that the exclusion has not been lost and is traceable.
The BC Court of Appeal decision Shih v Shih, 2017 BCCA 37 established that in order for a party to prove that their property should be excluded from family property, “he or she must do so with “clear and cogent evidence”. If documentary evidence is not available, the party bearing the onus of proof will need to testify as to their recollection of the transactions in dispute. That evidence will be scrutinized for credibility.
You can protect yourself by clarifying your intentions through written agreements, keeping track of documents, and by speaking with an experienced family lawyer. Mills Family Law has extensive experience with protecting, proving and tracing excluded property.
Depending on how excluded property is managed, it may be inadvertently converted into family property. For example, an exclusion may be lost when excluded property is transferred into joint names, such as when spouses contribute their own capital towards the purchase of a home. An exclusion may be lost if it is converted into derivative assets and the paper trail is not clear. For example, excluded property in the form of capital assets can be invested, mixed with family property, and reinvested several times over the course of a relationship. Unless a record of each transaction, along with evidence of intention to keep the excluded property apart from separate property, an exclusion can be lost. Excluded property may be disposed of or otherwise diminish in value, in which case a spouse will not be compensated with family property.
The burden of proving excluded family property with clear and cogent evidence can be very challenging. Tracing of excluded property can be a time-consuming process involving significant documentation. Careful consideration of case law is critical in determining whether an exclusion has been preserved. Mills Family Law has substantial experience in tracing excluded property and we can help.
The Supreme Court will not divide excluded property unless it would be significantly unfair not to. In assessing whether significant unfairness applies, the court will consider the duration of the relationship between the spouses, and a spouse's direct contribution to the preservation, maintenance, improvement, operation or management of excluded property. The court is also able to divide excluded property if family property or debt that is located outside of BC cannot be practically divided.
The short answer is that family property is most often, but not always, divided equally. Under the Family Law Act property and debt are divided equally such that each party received an equal share. However, the FLA also allows for unequal division of family property or family debt under certain circumstances where equal division would result in “significantly unfairness”.
Unequal division of family property and family debt involves consideration of the following factors:
Careful application of family law to the facts of every excluded property claim is required to establish whether or not equal division of family property or debt is significantly unfair.
Under the BC Family Law Act, benefits in a pension plan are family property. When you separate, the growth of the pension over the course of your relationship will generally be divided equally. Registered retirement savings plans (RRSPs) are also considered family property unless an exclusion applies. These kinds of assets often represent significant value and should not be ignored. Pension division can be a tricky legal landscape and you should always seek expert advice when dividing pensions at the end of a relationship.
The duty to disclose full financial information is a fundamental obligation in family law proceedings. Different types of disclosure are required when a spouse is self-employed, is in a partnership, or controls a corporation. Unfortunately, it often occurs in family law that one spouse will attempt to hide assets from their spouse. They may do this by simply failing to disclose certain assets, including bank accounts, corporate interests and investments, or real property. Legal title of a spouse’s property may be transferred to someone else, such as a family member or friend, while the spouse retains the benefit of that property. A spouse may artificially deflate the value of their business interests.
Through the litigation discovery process we employ an array of tools to effectively combat this type of foul play. These tools include but are not limited to:
When appropriate we also bring experts onboard, including forensic accountants to dig deeply into a non-disclosing spouse’s finances. Mills Family Law is effective at getting to the very bottom of a non-disclosing spouse’s finances. We also protect our clients who have met their disclosure obligations but are unable to satisfy their spouse’s demands for disclosure.
Only the Supreme Court of British Columbia can make orders respecting division of property and debt. Cases heard in Provincial Court include family law matters, but Provincial Court judges do not deal with divorce or division of family property.
Under the Family Law Act, certain claims must be made within time limits (the “limitation period”) or they are lost. An unmarried spouse must bring claims for property division and pension division within two years of the date of separation. Married spouses must bring claims for property division and pension division within two years of the date of the divorce or declaration of nullity. Some limitations also apply to child support matters, such as seeking child support from a stepparent. An application to set aside an agreement about property must be made within two years from the date the spouse first discovered, or reasonably ought to have discovered, the grounds for making the application. The Limitation Act also includes time limits that may apply in family law matters, such as time limits for claims to enforce or sue on a judgment. These time limits are suspended during any period in which the parties are engaged in family dispute resolution with a family dispute resolution professional, or a prescribed process. This includes the collaborative divorce process.
If you are entering the process of separation and divorce, you should seek legal advice to prevent any limitation period from expiring. If a limitation period has expired, you may be able to take steps to minimize the impact. Mills Family Law can help.
In family law, the litigation playing field is often unfairly balanced towards the spouse that controls the majority of family assets and wealth. To address this unfairness, section 89 of the Family Law Act allows the court to make an order for distribution of family property on an interim basis, meaning before final orders for property division are made after trial. The purpose of section 89 is to help economically disadvantaged spouses to access justice.
The test governing interim distribution of family property has two parts:
Orders under section 89 are “extraordinary in nature and must be assessed carefully”: McKenny v. McKenny, 2015 BCSC 1345. Mills Family Law has extensive experience obtaining interim distribution of family property. We can help.
