When a marriage or long-term relationship comes to an end in British Columbia, dividing property and debt fairly is critical to ensuring both partners maintain a stable quality of life after the separation. The rules for property division are fairly straightforward, but there are always exceptions and exemptions to consider.
Despite laws requiring an equal division of family assets, it is not always as easy as splitting things 50/50. If you and your spouse did not have a legal agreement stipulating how you would divide your assets in this situation, you would be wise to seek professional advice on the best way to protect your interests during property division.
Defining family property may be the sticking point in arriving at a fair division of assets. The law describes family property as those assets you and your partner own, whether jointly or separately, when you separate. This may include your home, your vehicles, bank accounts and pensions. The law excludes the following items from family property:
- Anything you or your partner owned before you married or moved in together
- Any gifts you or your spouse received individually
- Inheritances left to only one of you
- Certain awards, such as lawsuit damages or insurance payouts
However, even excluded property may play a part in asset division since certain property may have increased in value during the time you were married or cohabitating. For example, if you owned a business prior to your relationship, the business may remain your exclusive property, but any appreciation in value would be on the table for property division.
Division of debt
If you and your partner took on any debt during your relationship, the court will divide it similarly to the way it divides your assets. If you or your partner incurred additional debt to help maintain joint property after you separated, the court will consider that family debt even if it is in one name only.
The drawback to this is that the creditor will likely still expect payment from the partner whose name is on the debt. Therefore, if the court assigns one of your credit card balances to your partner, for example, you would be wise to cancel the card or pay it off to avoid default if your former partner fails to pay.
The court will also look at how an equal division of debts and assets will affect both partners. After considering many factors, the court may, on rare occasions rule in favor of an unequal division of debts and assets if a more balanced division would be grossly unfair to one partner. No matter your situation, your rights may be on the line. Obtaining sound legal advice and guidance is a wise step to make at the end of a relationship.