Our Vancouver Property Division Lawyers explain Excluded Property and Debt under the new BC Family Law Act . This Act talks about ‘excluded property” brought in to marriage or cohabitation. Other property can also be excluded. What does this mean when you are trying to divide BC family property at separation or divorce? It usually means that the value of the property you brought in to the marriage at the time of marriage is excluded from division and hopefully forever yours. But there’s more:

Examples of Excluded Property and Debt

  • if you bought a house for $100,000 at the time of marriage and at the time of separation it was worth $300,000, only $200,000 is open to division. The original $100,000 reverts back to the spouse who owned the property at the time of the marriage. The Remaining $200,000 will probably be divided in half in most cases. If you think this type of division is unfair, click here to learn more on how to argue an unequal division. For a comprehensive discussion on how real estate is divided, click here.
  • The same goes for debt. If the debt was incurred prior to marriage or cohabitation, it is excluded and therefore you do not have to pay for half of it at the time of separation. If it was incurred during the marriage or cohabitation, you are likely responsible for half of it. For a discussion on business debt, click here.
  • If you received an inheritance of gift during marriage, that property is also excluded and yours. Same goes for awards for personal injury and some family trusts.
  • Regarding taxes owing by one of you which were accumulated during the marriage or cohabitation, you are likely responsible for half. But there are exceptions. Click here to learn more.

What are Some Other Types of Excluded Property and Debt?

Our Vancouver Property Division Lawyers point to s.85 of the BC Family Law Act which says Excluded Property and Debt can include:

  1. property acquired by a spouse before the relationship between the spouses began and property derived from such property;
  2. inheritances to a spouse;
  3. gifts to a spouse from a third party;
  4. a settlement or an award of damages to a spouse as compensation for injury or loss;
  5. money paid or payable under an insurance policy, other than a policy respecting property; and
  6. Some family trust;

What if the Excluded Property and Debt Actually Loses Value after Marriage?

This is a crucial question for Vancouver Property Division Lawyers and for more information, click here. The recent BC Supreme Court case of Remmem v. Remmem dealt with this issue. The husband said that the wife should be responsible for half of the depreciation of the value of the property he brought in to the marriage. Let’s say the property’s value before marriage was $100,000 and now it was $50,000. The husband said the wife needs to pay the husband $25,000 which is half of the depreciated value. The wife said that she should not. The court looked at the BC Family Law Act and concluded that the depreciation of value cannot be considered and the husband was not allowed to hold the wife responsible for half of the depreciation of value:

[42]         In British Columbia, the legislation provides that the property acquired by a spouse before the relationship began is excluded, not the value of the property. As a result, when property depreciates, no part of the depreciated property is subject to division. The court has no discretion during the first stage of its analysis (i.e. when determining the property is subject to division) to include the original value of depreciated property in the division exercise. In the present case, this means the M.V. Chaser is not and never was family property, and the $100,000 value of the vessel in October 1990 cannot be brought into the equation to apply against other family property.

Excluded Property and Debt put under Joint Names or Gifted to a Spouse.

Interestingly, if the excluded property was gifted to the other spouse during the marriage or put under joint name, it  was excluded, this is what happens: 

  1. 50% of the property is still excluded; and
  2. the other 50% is divided in half.

This means that if the excluded property was worth $100,000 at the time of marriage and later it was put under joint names. The person having the excluded property would obtain 75% of its value and the other 25% would revert to the other spouse. For more clarification, click here. 

 

On top of BC Excluded Property and Debt division, you can make arguments for unequal distribution of Excluded Family Property or Deb. Click here for more information.

The issue of Excluded Property and Debt is an extremely complicated issue and there are numerous arguments that can be made to get more or less of the family assets depending on your situation. It is crucial that you at least consult with our award winning family lawyers to obtain your right and obligations. Call us at 604-974-9529 or get in touch. 

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