Property & Debt Division

Property Division After Separation in BC

When a relationship ends, dividing property and debts is often one of the most complex and significant issues to resolve. British Columbia's Family Law Act sets out a framework for how family property and family debt are identified, valued, and divided.

The general rule is that family property is divided equally between spouses, and family debt is shared equally. However, understanding what counts as "family property" versus "excluded property," and how to value different types of assets, is where the complexity lies.

What Is Family Property?

Family property includes most assets owned by either spouse at the date of separation, regardless of whose name they are in. This can include:

• The family home and other real estate
• Bank accounts and savings
• Investments, RRSPs, TFSAs, and other registered accounts
• Pensions and retirement benefits
• Vehicles
• Business interests
• Household contents and personal property
• Life insurance policies with a cash value

Excluded Property

Certain property is excluded from the equal division and remains with the spouse who owns it. Excluded property includes:

• Property owned by a spouse before the relationship
• Gifts and inheritances received during the relationship
• Court awards or insurance proceeds (not from family property)
• Property held in trust for the benefit of another person

However, any increase in the value of excluded property during the relationship is considered family property and is subject to division. Tracing excluded property and proving its value at the start of the relationship can be one of the more challenging aspects of property division.

Family Debt

Family debt includes debts incurred by either spouse during the relationship, as well as debts incurred after separation to maintain family property. This can include:

• Mortgages
• Lines of credit
• Credit card debt
• Vehicle loans
• Tax debts
• Student loans incurred during the relationship

Valuation

Most assets are valued as of the date of trial or agreement. For some assets, valuation is straightforward (bank accounts, for example). For others, professional valuations may be needed:

• Real estate appraisals
• Business valuations
• Pension valuations (actuarial reports)
• Valuations of collections, equipment, or other specialized assets

Unequal Division

While equal division is the starting point, a court can order an unequal division if equal division would be "significantly unfair." Factors the court may consider include the duration of the relationship, whether one spouse wasted or disposed of family property, and the financial capacity and situation of each spouse. Unequal division is the exception rather than the rule.

Important Timelines

For married spouses, there is a two-year limitation period from the date of divorce (or the date of an order annulling the marriage) to bring a claim for property division. For unmarried spouses, the limitation period is two years from the date of separation. Missing these deadlines can affect your ability to make a property claim, which is why early legal advice is important.