Who Does it Apply to?

The FLA applies to both married spouses, and unmarried spouses who have lived together for 2 years in a marriage-like relationship. The division rules also apply equally to refugee claimants and permanent residents.

Under the FLA married spouses have to start a court action within two years of the date of their divorce or the annulment of their marriage. Unmarried spouses have to start a court action within two years of the date they separated.

If couples do not want the property division rules to apply to them, they can make an agreement and divide their property as they wish. The court will have less ability to overturn these agreements. 

Excluded Family Property

Excluded property is the property each spouse had before the date they started living together or got married, whichever was first. The date of cohabitation is important under the FLA . Again, it is property like land, buildings, and bank account savings. It also includes some property a spouse got after the date they got married or started to live together, like gifts, inheritances, court awards, and insurance settlements. 

The property that is excluded from family property under the Family Law Act includes:

• Property acquired by a spouse before the relationship between the spouses began;
• Gifts or inheritances to a spouse;
• A settlement or award of damages to a spouse as compensation for injury or loss unless for both spouses;
• Money paid or payable under an insurance policy except if it relates to both spouses or lost income;
• Property held in a discretionary trust; 
• Property derived from property or the disposition of property referred to above; and
• Property acquired by one spouse after the relationship ended as long as it was not bought with family property.

A spouse usually does not have to divide excluded property with the other spouse after separation. However, if the excluded property increased in value while the couple were together, they usually have to share that increase in value.

Pensions can be family property and excluded family property

Spouses can divide pensions in a written agreement or the Supreme Court of BC can make an order about how pensions are to be divided. In very general terms, the pension fund that the spouses will share is the amount that was built up during the term of the spousal relationship. That part of the pension funds is usually spilt 50/50.

Registered Retirement Saving Plans are family property and can be equalized between the spouses without any taxes being paid. Canada Pension Credits can be equalized from the time the spouses began living together or got married to the date of separation. This is done by people who administer the plan in Ottawa.

Workplace Pensions can be equalized from the time the spouses began living together or got married to the date of separation regardless of whether the pension is being paid out or not. This is done by the people who administer the pension plan and not by the spouse who owns the pension. This may be a very complicated matter and it may be best to seek legal advice.

To divide property, it may need to be given a value

To divide property after a separation, the property usually has to be given a value. The value of family property is based on its fair market value which is the price that someone would typically pay for the property or its appraised price. In other words, “what it’s worth.” 

The property value is set at what it is worth on the date the spouses make an agreement for the division of family property, or the date of the court hearing to decide family property issues.

When it comes time to divide the property, it is the net value of the asset (the value of the property less any debts against it) that is used in the calculations; e.g. if you own a house worth $700,000 and there is a mortgage of $300,000 still outstanding on it, the net value of the house is $400,000. Secured lines of credit, realtor fees, legal fees, penalties and other expenses associated with selling the family home may also be deducted to arrive at the net value of the house.
 

The court may order an unequal division when an equal division would be significantly unfair

The courts can order an unequal division of family property if it would be “significantly unfair” to have an equal division. The court may order, or the spouses may agree, that only a few specific assets, rather than all of the family property, should be reapportioned in favour of one spouse or the other.

This might happen to allow one spouse to keep more of a personal disability pension or more of a personal inheritance, while dividing all the other family property equally.

The court can consider:

• The length of the spouses’ relationship
• A spouse’s contribution to the other spouse’s career
• Whether the amount of family debt is more than the value of the property
• Whether a spouse reduced the value of family property such as real estate or got rid of the property to avoid sharing it or the full value of the property with the other spouse
• Any taxes owing from dividing the property

If you are suspicious of your former partner, protect yourself

If you suspect that your spouse may try to sell off, or transfer family property before it can be divided, you can make an application to the Supreme Court for an order restraining the other spouse from disposing of any property at issue.

If you are suspicious of your former spouse, there are several steps you can take to protect yourself:

• Take a careful tally of what each of you owns
• Record the date of separation even if you are still living in the same home
• Register an interest in real property
• Protect your interest in those assets from claims made by creditors, third parties, and against the prospect of your spouse’s bankruptcy, and
• Obtain an interim order that a share of the family assets be distributed prior to the trial.