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Asset Division: What Happens When Parties Separate 

Asset Division:  What is a Family Asset?

In family law matters asset division is usually a total concern for people who are separating from their spouses. 

Which assets are considered joint assets and which are not?

Family assets, now defined as family property, are defined under s. 84 of the Family Law Act of BC as real and personal property owned by at least one of the spouses. Such family assets include:

  • a share or an interest in a corporation;
  • an interest in a partnership, an association, an organization, a business or a venture;
  • property owing to a spouse as a refund, including an income tax refund;
  • property owing to a spouse in return for the provision of a good or service;
  • money of a spouse in an account with a financial institution;
  • a spouse's entitlement under an annuity, a pension, a retirement savings plan or an income plan.

What is not included as a family asset is referred to as excluded property and includes: 

  • property acquired by a spouse before the relationship between the spouses began;
  • gifts or inheritances to a spouse;
  • a settlement or an award of damages to a spouse as compensation for injury or loss, unless the settlement or award represents compensation for loss to both or lost income of a spouse;
  • money paid or payable under an insurance policy, other than a policy respecting property.

Asset division is simply about answering the following questions:

  • What percentage of our money, real estate, and investments will each of us get?
  • What if I brought in most of the assets and we have only been together a short time?
  • Is asset division always equal?
  • What if we have debt, does that get divided too?
  • I bought most of the furniture, kitchen stuff, and appliances, can I keep them all as I paid for them in the first place?
  • When one of us gives the other a gift, has a common law contract been created?

What percentage of our money, real estate, and investments will each of us get?

In the olden days (like, prior to March 18, 2013 when the new Family Law Act) came into effect) there was an assumption that each party was entitled to 50% of the assets of the parties in the relationship regardless whose name the assets were in. If someone wanted to dispute that amount because, let’s say they brought in the majority of the assets and the relationship was a relatively short one, the onus was on that person to prove that this was fair before the court.

This asset division was really stressful and potentially really unfair in certain circumstances. Imagine the person who brings a clear title $750,000 home into the relationship and that the relationship only lasts 5 years. Then the house is exposed to being divided with the person you were in a relationship with even though that relationship did not work out after 5 years. This resulted, at times, as a windfall to the spouse who did not bring much in the way of assets into a relationship.

Now the law is way better and much more fair. Now what happens is that you are each able to keep the value of what you brought into the relationship. So, the $750,000 house would not be exposed. The balance of your assets that accumulated during the course of your relationship would be divided equally. What you accumulated as a couple, you divide as a couple.

“Phew”

Nowadays, thanks to the new Family Law Act, you get to keep what you brought into the relationship. Any assets that grew during the course of your relationship you would share. At least you get to keep what you brought in. 

Is asset division always equal? 

Asset division is mostly always equal once we first take out any assets that are excluded from division (that being what you brought into the relationship).

What if we have debt, does that get divided too? 

Under the new legislation, yes debt can be divided as well. It is not only asset division that counts in the new legislation.  Somebody cannot just leave their spouse with a pile of debt. There is a provision that family debt is to be shared in the same way that family assets are (of course the debt being on the more depressing side of the ledger). Of course even if debt is divided, it assumes that each spouse will actually pay their portion of the outstanding debt which may not always happen.

If you need help with your debt consultation talk to our friend Benjy and learn a bit more about when you have more debt than assets.

I bought most of the furniture, kitchen stuff, and appliances. Can I keep them all as I paid for them in the first place? 

If you purchased assets during the relationship they are subject to equal division. Yet often you can negotiate keeping items that you purchased when traded off something else. Another thing to think about is that when we are talking about “chattels” (things like furniture and appliances) they tend to be only worth a fraction of what you paid for them once used. So, it is often not even worth it to get into any significant disputes over such items. 

By Val Hemminger, Lawyer and Mediator

Contact Val for your legal consultation

Phone us now at 250-220-8686 or use our contact us form.

Your initial half-hour consultation with one of our lawyers is of no obligation.

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At Hemminger Law Group we commit to providing you with the highest quality legal information on this website. However, nothing on this website should be construed as actual legal advice. Every case is different and it is important that you consult a lawyer before making any decisions with respect to a legal matter.

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