January 7, 2021
In Vancouver, family property division, family debt division and excluded property division are governed by the laws in the Family Law Act. These laws apply to those couples who meet the definition of “spouses” in the Family Law Act. Spouses are those couples who have been “living in a marriage-like relationship” for a period of two years or more.
If you read my last blog post, which can be found here you will recall that the question of whether a couple meets the definition of “spouses” under the Family Law Act is often not easy to answer and is dependant on each individual situation. If you are unsure of whether you and your partner are legally “spouses,” then please read my last post!
In short, if you are entering into a new relationship, presently in a relationship, or contemplating separation, you should think about how your family property rights may be affected.
In this post, I will distinguish between the different types of property. Under the Family Law Act, property is either family property or excluded property.
What is family property?
Family property is generally shared by the spouses if they separate, whereas excluded property is not. Family property is all property earned or acquired by one of the spouses during the “spousal relationship.” This will include:
- Earnings from employment, self-owned business, dividends, capital gains etc.
- Increases in the value of:
– Real estate, investments and businesses due to market forces real estate due to payments made towards the principal of a mortgage on title. In the Vancouver real estate market, this aspect of family property is especially relevant and contentious.
– Excluded property, such as gifts you have received from family members, inheritances, personal injury settlements, family heirlooms any more, as is further discussed below.
What is excluded property?
There are eight categories of excluded property in the Family Law Act, with the three most common being:
- Property owned by a spouse prior to the spousal relationship. For example, your equity in real estate owned prior to becoming spouses.
- Gifts to one spouse from a third party. For example, a gift from your parent to you for the down payment of real estate.
- Inheritances received by one spouse. For example, a cash gift left by your grandmother who passed away.
What is important to know about excluded property is that the value of excluded property which is excluded from family property division if spouses separate is not the entire value of the excluded property, but the earlier of the following:
- the value of the excluded property at the date you and your partner became spouses (the earlier of the cohabitation or the date of marriage); or
- the date that the excluded property was acquired.
As mentioned above, if a spouse’s excluded property increases in value during the spousal relationship, then that increase will be “family property” and will be shared between the parties equally.
Can you lose your excluded property? Yes, sometimes easily, in fact. In my next blog post I will discuss how might lose your excluded property and the steps you can take to prevent this from occurring, so please stay tuned.
NOT LEGAL ADVICE. Information made available on this website is for information purposes only and is not legal advice. Do not rely on this information, nor take or fail to take any action, based upon this information. Do not disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Contact me here to discuss any specific legal issues.[/vc_column_text][/vc_column][/vc_row]