Types Of Property and How It Is Divided In A Divorce

By David Halkett & Aman Kahlon

When a relationship ends, you may be faced with some difficult decisions around property division. It’s commonly thought that family property is split 50/50 in divorce. However, property division in a divorce is much more nuanced and complicated than it may first seem. 

In the article below, our Family Law lawyers discuss the types of property in a marriage and how it’s divided in a divorce or a legal separation. 

How is property divided in BC during a divorce?

When spouses separate, all family property is shared equally unless the couple has an agreement that says something else. You can agree to something different from the rules, but a judge can disallow an agreement if it’s “significantly unfair” or unfairly negotiated. A judge can also decide to divide property unequally if following the rules would be significantly unfair.

When assessing whether an unequal division of family property is necessary, the court will consider:

• The duration of the relationship
• The terms of agreements between the spouses
• A spouse’s contribution to the career or career potential of the other spouse
• Whether family debt was incurred in the normal course of the relationship between the spouses
• The ability of each spouse to pay a share of the family debt and if the amount of family debt exceeds the value of family property 
• Whether a spouse, after the date of separation, caused a significant decrease or increase in the value of the family property or family debt beyond market trends
• Whether a spouse substantially reduced the value of the family property or transferred it to someone else
• Whether a spouse incurred a tax liability due to a transfer or sale of property or as a result of an order

Family property

Family property is everything that you or your spouse owned separately or together on the date you separate. Family property is shared equally when a couple goes through a divorce. Even if one spouse’s contribution to the property was much greater, each spouse is entitled to half of the interest in all family property, subject to it being significantly unfair to divide that family property equally. For example, a house owned by the spouses on the date they separate is considered family property regardless of whose name is on the title of the house. 

Family property includes:

• The family home
• RRSPs
• Investments
• Bank accounts
• Insurance policies
• Pensions
• An interest in a business
• The amount of any increase in the value of the excluded property since the relationship started.

Excluded property

However, there is another type of property which generally isn’t divided in a divorce, and it’s called excluded property.

What can be considered as excluded property? Usually, it’s the property that a party brings into a relationship. It can also include gifts from others, inheritances you received during a relationship, court awards and settlements that only one spouse acquired during the relationship, and property held for a spouse in a trust.

What will be shared is the increase in value of the excluded property. If the value of the excluded property increased during a relationship, it will be divided equally in divorce.

However, just because a property is classified as the excluded property does not mean that the entire property is excluded from division. The gain in the value of your excluded property is subject to division.

In order to prove that something is an excluded property, you may end to trace it and show how it came from pre-marriage assets or gifts. Tracing a property can be difficult, especially because some documents may be long lost or hard to access many years after the marriage.

Conclusion

Asset division during divorce can be extremely complicated. With certain property excluded from family assets, you may need to prove that you acquired it before marriage or that it was a gift from someone other than the spouse. If you’re looking to protect your property or have questions over how your property will be divided, seek legal advice as soon as possible. 

Our lawyers know how deeply challenging property disputes during a divorce can be. With over five decades of legal expertise, we are proud to offer an empathetic and result-oriented service to clients navigating the legal separation process.

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For over 50 years, McQuarrie has advocated for and helped clients throughout B.C. deal with the complex issues that arise in family law matters.

Because every family is unique, McQuarrie’s lawyers bring a humanized, personal approach to addressing each situation.

In legal separation matters, our team of compassionate family lawyers will help you navigate divorce and ensure that your family’s interests are prioritized during the separation.

We are here to provide guidance and support needed to avoid making similar mistakes during the divorce process.

Contact us at 604.581.7001 to book a consultation with one of our Family Law lawyers today.