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Difference between revisions of "Dividing Property and Debt in Family Law Matters"
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Dividing Property and Debt in Family Law Matters (view source)
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<blockquote>Next you need to look at any ''cohabitation agreement'' or ''marriage agreement'' that you may have signed earlier in your relationship to see whether it talks about property or debt.</blockquote> | <blockquote>Next you need to look at any ''cohabitation agreement'' or ''marriage agreement'' that you may have signed earlier in your relationship to see whether it talks about property or debt.</blockquote> | ||
If you have an agreement about property, ''stop''. Section 94(2) says that you cannot apply for a division of property if there's a written agreement about property or debt until that agreement is set aside. | If you have an agreement about property, ''stop''. Section 94(2) says that you cannot apply for a division of property if there's a written agreement about property or debt until that agreement is set aside. Accordingly, if you have an agreement about property that you want to vary or set aside, you must seek an order for the court. | ||
'''Step Three''' | '''Step Three''' | ||
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::*you and your spouse lived somewhere else for a long time, | ::*you and your spouse lived somewhere else for a long time, | ||
::*there is a court action commenced in another jurisdiction seeking the same or similar relief, | |||
::*you have property outside of the province, or | ::*you have property outside of the province, or | ||
::*you have a cohabitation agreement or a marriage agreement that requires the laws and courts of another place to be used, | ::*you have a cohabitation agreement or a marriage agreement that requires the laws and courts of another place to be used, | ||
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<blockquote>Property and debt that you got ''after you separated'' is generally the separate property or separate obligation of each spouse, with two main exceptions:</blockquote> | <blockquote>Property and debt that you got ''after you separated'' is generally the separate property or separate obligation of each spouse, with two main exceptions:</blockquote> | ||
::*property bought after separation with family property is also family property, and | ::*property bought after separation with family property is also family property (i.e. if the source of the funds used to buy the property can be traced back to family property) , and | ||
::*debt incurred after separation to maintain family property is family debt. | ::*debt incurred after separation to maintain family property is family debt. | ||
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<blockquote>For ''excluded property'' and ''personal debt'', what you need to know is:</blockquote> | <blockquote>For ''excluded property'' and ''personal debt'', what you need to know is:</blockquote> | ||
::*What was the value of each asset on the date you began to live together or got married, whichever came first? | ::*What was the value of each asset on the date immediately before you began to live together or got married, whichever came first? | ||
::*For property acquired during the relationship, when did you acquire each asset and what was it worth when you received it? | ::*For property acquired during the relationship, when did you acquire each asset and what was it worth when you received it? | ||
::*Was it a gift to you or you and your spouse together? | ::*Was it a gift to you or you and your spouse together? | ||
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'''Step Seven''' | '''Step Seven''' | ||
<blockquote>Now that you've got the numbers worked out, you may want to think about whether an ''equal division'' of family property and family debt would be "significantly unfair," bearing in mind the factors listed in s. 95(2). If it wouldn't be significantly unfair, then split the family property and family debt equally and go on with your life. If it would be significantly unfair, then you've got to figure out what a fair split looks like and I wish you the best of luck sorting this out in a speedy manner.</blockquote> | <blockquote>Now that you've got the numbers worked out, you may want to think about whether an ''equal division'' of family property and family debt would be "significantly unfair," bearing in mind the factors listed in s. 95(2), which includes but is not limited to the duration of relationship and 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 forces. If it wouldn't be significantly unfair, then split the family property and family debt equally and go on with your life. If it would be significantly unfair, then you've got to figure out what a fair split looks like and I wish you the best of luck sorting this out in a speedy manner.</blockquote> | ||
<blockquote>Finally, you may also want to think about whether there's a reason to share in some or all of the ''excluded property''. Excluded property can be divided if there's property outside of British Columbia that ought to be family property but can't easily be divided, or if it would be "significantly unfair" not to share excluded property, bearing in mind the factors listed in s. 96(b). If there's no reason to share excluded property, carry on. If it there is a reason to share that property, then you've got to figure out what a fair division looks like.</blockquote> | <blockquote>Finally, you may also want to think about whether there's a reason to share in some or all of the ''excluded property''. Excluded property can be divided if there's property outside of British Columbia that ought to be family property but can't easily be divided, or if it would be "significantly unfair" not to share excluded property, bearing in mind the factors listed in s. 96(b). If there's no reason to share excluded property, carry on. If it there is a reason to share that property, then you've got to figure out what a fair division looks like.</blockquote> | ||
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Under s. 89, the court can make an order for the interim distribution of some of the family property to a party to pay for: | Under s. 89, the court can make an order for the interim distribution of some of the family property to a party to pay for: | ||
#the cost of the court proceeding, | #the cost (i.e. legal fees) of the court proceeding, | ||
#the cost of another dispute resolution process, like mediation, arbitration, and collaborative settlement processes, and | #the cost of another dispute resolution process, like mediation, arbitration, and collaborative settlement processes, and | ||
#the cost of expert's reports, like needs of the child assessments under s. 211, property | #the cost of expert's reports, like needs of the child assessments under s. 211, property appraisals, or business valuation. | ||
In practice, the court will usually make an order for an interim distribution for legal fees if the court feels it is necessary to "level the playing field" between spouses. By making such an order, the court tries to ensure that the spouse who has all the money and can afford a lawyer does not have an advantage over the spouse who does not have as much money and may not be able to afford to pay for a lawyer without an interim distribution for legal fees. | |||
=====Use of property===== | =====Use of property===== | ||
Under s. 90, the court can make an interim order that one spouse have the exclusive right to live in the family home and use the property kept at the family home. The court will make these orders if it's no longer possible for the spouses to share the home and if the convenience to the spouse who's staying in the home outweighs the inconvenience to the spouse who's being made to leave. | Under s. 90, the court can make an interim order that one spouse have the exclusive right to live in the family home and use the property (i.e. household contents and furnishings) kept at the family home. The court will make these orders if it's no longer possible for the spouses to share the home and if the convenience to the spouse who's staying in the home outweighs the inconvenience to the spouse who's being made to leave. Usually, if there are children (especially young children), the spouse who has primary care of the children will be the spouse who remains in the family home because the children require stability and security of remaining in the family home. | ||
Under s. 91(2)(a), the court can make other interim orders "for the possession, delivery, safekeeping and preservation of property." This might include orders that a spouse must return personal property to the other spouse or that a spouse will have the sole use of personal property, like a car that's necessary to go to work or take the kids to school. | Under s. 91(2)(a), the court can make other interim orders "for the possession, delivery, safekeeping and preservation of property." This might include orders that a spouse must return personal property to the other spouse or that a spouse will have the sole use of personal property, like a car that's necessary to go to work or take the kids to school. | ||
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====Dividing property and debt unequally==== | ====Dividing property and debt unequally==== | ||
Under s. 95(1) of the ''[[Family Law Act]]'', the court may divide family property or family debt unequally, but only if equal division would be "significantly unfair"in the context of the factors mentioned in s. 95(2). Recent court decisions explain that the unfairness must be "weighty, meaningful or compelling." A judge can only order an unequal division of family property where the result of equal division would be so unfair as to be unjust or unreasonable. <!-- Note that significant unfairness in this context requires much more than differing financial contributions in a relationship. --> | Under s. 95(1) of the ''[[Family Law Act]]'', the court may divide family property or family debt unequally, but only if equal division would be "significantly unfair"in the context of the factors mentioned in s. 95(2). Recent court decisions explain that the unfairness must be "weighty, meaningful or compelling." A judge can only order an unequal division of family property where the result of equal division would be so unfair as to be unjust or unreasonable. It is highly unlikely that a court would find the circumstances to be "significantly unfair" merely because one spouse worked during the marriage and the other spouse did not. <!-- Note that significant unfairness in this context requires much more than differing financial contributions in a relationship. --> | ||
Section 95(2) provides a list of factors considered when deciding if equal division of property and debt is significantly unfair: | Section 95(2) provides a list of factors considered when deciding if equal division of property and debt is significantly unfair: | ||
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===Making a valid agreement=== | ===Making a valid agreement=== | ||
Under the ''[[Family Law Act]]'', an agreement about the division of property and debt may be oral or written. | Under the ''[[Family Law Act]]'', an agreement about the division of property and debt may be oral or written. However, it is highly recommended that the agreement be in writing so that there is less chance of a dispute over the terms of the agreement. | ||
There are requirements about the validity of agreements that are part of the common law of contracts. These are discussed in a little more detail further on in this section, but for a more thorough discussion you should look at the [[Family Law Agreements]] chapter. | There are requirements about the validity of agreements that are part of the common law of contracts. These are discussed in a little more detail further on in this section, but for a more thorough discussion you should look at the [[Family Law Agreements]] chapter. | ||
It is also highly recommended that each spouse obtain independent legal advice (i.e. hiring a lawyer (separate lawyers) to explain and give advice about the terms of the agreement) before signing the agreement to ensure that each spouse understands the nature, circumstances, terms and the effect of the agreement, especially if one spouse has a limited understanding of the English language or has limited education. | |||
It is also important to ensure that each spouse has properly and fully disclosed all assets and debts in the spouse's name in the agreement. An agreement that says "mine is mine and yours is yours" without proper disclosure may not be upheld by the court if one spouse seeks to set it aside or vary it. | |||
===Asking the court to set aside an agreement=== | ===Asking the court to set aside an agreement=== | ||
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{{REVIEWED | reviewer = [[ | {{REVIEWED | reviewer = [[Helen Chiu]], May 14, 2019}} | ||
{{JP Boyd on Family Law Navbox|type=chapters}} | {{JP Boyd on Family Law Navbox|type=chapters}} | ||
