What Property Is Excluded From Division When You Separate in BC?

When spouses separate in British Columbia, most of what either of you owns is split equally. Some property sits outside that split, though. If you inherited money, or owned a home before the relationship began, you may wonder whether it stays yours.

The answer depends on the category of property, how you can prove it, and what has happened to it since. This article walks through the rules in the Family Law Act, including the exceptions that catch many people by surprise.

This article covers the law of British Columbia.

Family property and excluded property

Unless an agreement or order says otherwise, spouses are equally entitled to family property and equally responsible for family debt. Family property is everything the spouses own separately or together on the date of separation, and it does not matter whose name it is in. Excluded property is the main category left out of that split.

What counts as excluded property

Section 85(1) of the Family Law Act lists the main kinds of excluded property:

• Property acquired before the relationship began.
• Inheritances.
• Gifts from a third party.
• Most settlements or damages for injury or loss.
• Certain insurance proceeds.
• Property derived from any of these.

There are limits on the last two kinds. Settlements, damages and insurance money are not excluded to the extent they compensate for loss to both spouses or for lost income. Property insurance proceeds are not within the insurance exclusion.

Proving it, and what adding a name to title does

The spouse who says property is excluded is responsible for demonstrating that it is. Records such as statements, wills, gift documents and purchase records can matter here, so keep them.

Excluded status applies despite any transfer of legal or beneficial ownership between spouses. For example, adding a spouse to title does not by itself change the exclusion. Title also does not decide who keeps the house in general: the family home is family property regardless of whose name is on title.

Increase in value is shared

Excluded does not always mean fully protected. The increase in value of excluded property since the later of the start of the relationship or the property's acquisition is itself family property and is shared.

The government's example: a house worth $300,000 when the spouse moved in and $500,000 at separation leaves the owner the original $300,000, and the $200,000 increase is shared. A home owned before the relationship stays excluded property, but its increase in value is shared.

When a court can divide excluded property, and agreements

Excluded property can be divided only if it cannot practically be divided outside B.C., or if not dividing it would be significantly unfair. Government guidance gives examples of these narrow cases: long interdependent relationships, or family property located outside B.C. that cannot easily be divided.

Spouses can also agree in writing to change what is included or excluded. A court cannot override a written, witnessed agreement unless it is set aside.

What to do next

• Gather records showing when you acquired each item and where it came from.
• Note the value of excluded property at the start of the relationship and today.
• Keep track of any changes to title or any mixing of funds.
• Check any agreement you have signed about property.
• Watch the time limit and get legal advice early.

A proceeding to divide property must be started no later than 2 years after the divorce judgment for married spouses, or after the date of separation for spouses in a marriage-like relationship. That time limit is suspended while the people are in family dispute resolution with a professional or a prescribed process. A lawyer can confirm how these rules apply to your situation.

Frequently asked questions