Understanding Family Property Division in British Columbia: Common Misconceptions & 2023 Law Changes - Family Mediation CenterFamily Mediation Center
Understanding Family Property Division in British Columbia: Common Misconceptions & 2023 Law Changes
Learn how BC family property laws work, avoid costly mistakes, and understand the latest 2023 amendments impacting property exclusion.
Understanding how family property is divided in British Columbia can help you avoid costly mistakes—both emotional and financial. Here’s a breakdown of the five most common misconceptions people have about BC family property laws and how to avoid them, additionally the new change in the law in 2023 may change the concept of exclusion .
Mistake #1
Thinking BC Family Property Is Always Divided Equally
In BC, property is divided equitably, not necessarily equally. The courts start with a 50/50 split, but this can shift based on several factors, such as:
- The length of the relationship
- Pre-existing assets or large inheritances
- Contributions to the family or career sacrifices
- Medical hardships or family debt
- A spouse’s financial behavior around separation
Property may also be excluded from division in specific scenarios, especially in short-term relationships.
Mistake #2
Believing “Cheaters” Get Nothing
Canada follows a “no-fault” divorce system. The courts do not penalize adultery when dividing property—unless family funds were used to support an affair. While adultery can allow for a quicker divorce, it doesn’t impact how assets are split. In fact, rushing into divorce before property division may have negative tax consequences.
Mistake #3
Assuming the Higher Earner Keeps Everything
It doesn’t matter who made the money. Unless a legal agreement specifies otherwise, all earnings during the marriage are considered family property, and are subject to division. The default rule is equal division, regardless of income disparity
Mistake #4
Thinking Legal Title Determines Ownership
Titles don’t always reflect ownership. Even if an asset is only in one spouse’s name, it may still be considered family property. The courts look beyond titles to intention, use, and contribution, and determine whether an asset was meant to be jointly shared or kept separate.
Mistake #5
Believing a Spouse Has No Claim to Your Business
A business started during the relationship is family property, even if your spouse had no direct involvement. The law assumes that your spouse’s role in the relationship indirectly contributed to your ability to build or grow the business. Additionally:
- Businesses started before the relationship may have growth in value considered family property
- Commingling business and family finances can blur exclusions
- New amendments to the BC Family Law Act affect how joint ownership and excluded property are handled
Avoiding Excluded Property Mistakes
BC law recognizes certain excluded property, such as:
- Assets owned before the relationship
- Inheritances and gifts to one spouse
- Personal injury settlements
However, once excluded property is used for family purposes (e.g., buying a jointly titled home), it may lose its excluded status. The courts now focus heavily on intent at the time of transfer—a complex and evidence-based analysis.
Key Legal Takeaways:
- Keep excluded property separate
- Avoid commingling with joint accounts or jointly titled assets
- Document intentions clearly, ideally through a legal agreement
- Seek legal advice before or during a relationship to protect your interests
Even in happy relationships, proactive planning can prevent future disputes and preserve peace of mind.
Section 85 is amended by adding the following subsection:
(3) If property is excluded from family property under subsection (1), the exclusion applies despite any transfer of legal or beneficial ownership of the property from a spouse to the other spouse.
This proposed amendment is significant because it squarely addresses the discord between the presumption of advancement and division of excluded property and enables parties to claim their excluded property even if the property has been transferred into the name of the other spouse.
Going back to the example above, if Spouse A uses their inheritance monies to purchase a home for their family, and registers it in joint names with Spouse B, the law no longer presumes that Spouse A intended to make a gift to Spouse B. If Spouse B wants to make a claim for division of the excluded property, they will need to do so under section 96 of the FLA.
Legislature has apparently agreed and proposes the following revisions:
First, new section 81.1 will abolish both the presumption of resulting trust and the presumption of advancement as between spouses.
Second, new subsection 85(3) provides that excluded property will continue to be excluded despite any transfer of legal or beneficial ownership from one spouse to the other.
So after amendment, property that is excluded will remain excluded, regardless of transfers between spouses.
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