November 19th, 2020 by Dan Shea

Our family law team is experienced in a wide range of services including helping in marriage contracts, cohabitation contracts, separation agreements, divorce proceedings and custody disputes.

One of the inquiries Associate Dan Shea and the family law team often hear in a family breakdown is "how are the family assets, like our home divided equally?"

Dan answers that question with a very common example.


Transcript

Dan Shea: One of the things we help with at FH&P Lawyers is people who have issues relating to how their family assets are going to be divided after separation. This is one of the typically more contentious areas of family law. The Law in British Columbia is relatively simple, family assets get divided equally. The places that people run into problems and issues is with how that is going to work and sometimes they may think things should be divided up other than equally. What happens for instance is if one person comes into the relationship with substantially more than the other.

The example I’ll give you is a case where someone has an inheritance that they received prior to the relationship beginning. When they enter into the relationship they've got $60,000 that they received from their parents estate and during the course of their relationship they buy a family home together so one of the parties is putting $60,000 as the down payment on the family home. After a few years together they separate, during the course of their separation they are going to have to deal with the disposition of the family home and what would be a fair way of doing that. In British Columbia the usual way of dividing things up after a relationship ends is family property gets divided equally. There's an exception to that, some things the couple have are called “excluded assets.” The assets that parties have coming into the relationship are usually excluded from that equal division. An interesting and thorny case arises when, what would have been an excluded asset (the $60,000) is put into a family asset (house) so the family home that the parties live in for several years would be a family asset that would be divided equally, but it was funded in part by one person's excluded asset. The way to deal with that is to approach it prior to the relationship commencing or at the outset of the relationship. Parties often enter into separation agreements or marriage and cohabitation agreements before getting together and these documents lay out how they are going to have things work in the event that they do separate. An excluded asset can be addressed specifically in a cohabitation agreement and the parties can agree at the outset, that they acknowledge one member has $60,000 and if that happens to be put into a family asset, you’re going to take that money out before the family asset gets divided equally.

The other way those can be dealt with is during the course of the relationship. If for instance you didn't enter into a marriage or cohabitation agreement you can still decide to buy a house, and if one partner has $60,000, they can put that money into the house and then at that time the parties can agree that it will be excluded from the division of family assets if they separate in the future. It is important for the intentions to be crystal clear because in the event that this ever goes to court and there's a dispute about how an asset will be divided up, the courts will look very specifically to the parties intentions as they entered into the relationship and as they use the asset. Where an asset is what's called “commingled,” meaning it gets put in with other assets and suddenly there's some confusion about whether it is a family asset or excluded, the courts will want some very hard evidence about what the intention was when the excluded asset became a part of family property in order for you to maintain that it should still be yours and yours alone because it's excluded.

That's one of the issues that we help people with, here at FH&P Lawyers.

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