Script 124 gives information only, not legal advice. If you have a legal problem or need legal advice, you should speak to a lawyer. For the name of a lawyer to consult, call Lawyer Referral at 604.687.3321 in the lower mainland or 1.800.663.1919 elsewhere in British Columbia.

This script discusses dividing up the family assets when a marriage breaks up.

The information on this script applies only to legally married couples
If you were involved in a relationship outside of marriage – for instance, if you were living common-law with another person, or if you were in a gay or lesbian relationship – the laws that apply to your situation are different. You should refer to script 148 on “Common-Law Relationships: Your Income, Support and Property Rights” and/or script 163 on “Gay and Lesbian Relationships.”

Note, however, that there’s an exception if you were in a common-law relationship and you entered into a cohabitation agreement dealing with property. In this case, the laws of property division for married couples described in this script apply to you as well. A lawyer can advise you further on this exception.

The law about dividing family assets is contained in the Family Relations Act
The general rule is that each spouse is entitled to a one-half interest in each family asset. But this, of course, leads to more questions: What is a family asset? When does each spouse get his or her share of those assets? Are there any exceptions to the “50/50 rule”?

First, what is a family asset?
A family asset is property owned by the spouses jointly, or property owned by either one of them that’s used by a family member for a family purpose. Obvious examples are the family home and its contents, and the family car. Other family assets might be bank accounts, a boat or recreational vehicle, and investments such as term deposits.

Are RRSPs and pensions family assets?
Yes. They’re family assets by definition, no matter when they were acquired or whether they were ever used for a family purpose. There are special provisions in the Family Relations Act for dividing most pensions. There are also special rules for the division of some pensions plus Canada Pension Plan credits when a marriage or common-law relationship ends, which aren’t found in the Family Relations Act. Your lawyer can help with this.

Shares in a company can be family assets
If assets used for a family purpose are owned by a company in which one spouse owns shares, then those shares can be a family asset. Take the case of a spouse who owns a company. Say the company is the registered owner of the family home. In that case, the spouse’s shares in the company are probably a family asset.

Can a business be a family asset?
It’s possible for a spouse’s business to be declared a family asset – even if that business doesn’t have any obvious connection with assets used by the family. The law recognizes that the spouse who assumes all or most of the child-rearing and household duties indirectly contributes to the business owned by the other, by allowing the other spouse the time to pursue and build up the business.

Not every asset owned by one of the spouses will be a family asset
Things such as jewelry or a motorcycle owned or used by only one spouse might not be divided. Also, property owned exclusively by one spouse and used for business purposes isn’t part of the family assets if the other spouse made no direct or indirect contribution to it. But the court will consider all assets owned by both spouses, and may decide that some assets, which aren’t family assets, can still be taken into account when actually dividing the property, so the non-owning spouse may still receive an interest in that property.

What if a spouse tries to hide or sell their assets before or after the separation?
Then the court can penalize that spouse. The court can prevent the transfer of any gift of property to a third person if the court is satisfied that the transfer is being made to defeat a claim by the other spouse. The court can also reverse a transaction that’s already occurred. 

When does each spouse get his or her interest in the family assets?
During the marriage, each spouse owns his or her property separately and can do almost anything they please with it. The notion of family assets and “equal sharing” comes into play only when there’s a “triggering event.” A triggering event includes:

• a separation agreement
• a declaration by the court that there is no reasonable prospect of reconciliation
• a divorce
• a court order declaring the marriage null and void

A divorce isn’t required to apply for a division of assets. But once a divorce, an order for judicial separation, or an order declaring a marriage null and void has been granted, each spouse only has two years within which to apply for a division of the assets. In certain circumstances, however, it is possible that a court may grant an extension of this two-year limit.

Lastly, are there any exceptions to the 50/50 rule?
Yes. In some cases it would be terribly unfair or “inequitable” to divide the family assets equally. For example, say the wife owns her own home when she gets married. After eight months of marriage, the couple separate. It isn’t likely that any judge would award the husband a half interest in that house – it would be a family asset all right, but the husband would receive much less than one-half of the value of the house. The Family Relations Act calls this a “reapportionment based on fairness.” The court’s main duty is to ensure “fairness” and an “equitable division” of family assets.

What does the court look at to reapportion the family assets?
The factors considered include the length of the marriage, the length of time the spouses have been separated, the date the property was bought or sold, whether the property acquired by one spouse was a gift or inheritance, the needs of each spouse to become or remain economically independent and self-sufficient, and other factors relating to the purchase, preservation, improvement or use of the property.

Can spouses agree to an unequal division of assets?
Yes. They can do this in a separation agreement, or they might have made a marriage contract sorting out the ownership of property when they got married. But such a division must still be fair in the circumstances, or the court may review and change the agreement. For more information on marriage contracts, go to script 162 on “Marriage Contracts.”

Summary
When there’s a triggering event such as a divorce or separation agreement, each spouse is entitled to an interest in each family asset. Normally it’s a one-half interest, except where that would be unfair. Because the division of family assets raises some very complex legal issues, it’s wise to get independent legal advice immediately. With proper advice, it’s often possible to resolve all of these issues without having to go to court. A court case can be a costly and unpleasant experience, so your lawyers will usually encourage you to try to resolve your dispute in a fair and sensible manner.

[updated November 2007]

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