The Family Relations Act is the provincial law which deals with the division of property between spouses on the breakdown of their marriage. (Part 5 of the act deals with the general division of family assets and Part 6 deals with the division of pensions.) The term "property," as it is used in the Family Relations Act and in this website, doesn't only refer to houses and land. Property means real property and any other asset, such as jewelery, furniture, stocks, art collections and cars, which you might see described as "personal property" or "chattels."

Only property that falls within the Family Relations Act's definition of "family asset" is subject to division between spouses. The act talks about three categories of property: family assets, business assets, and "other" assets. Before a court make an order for the division of property, it must make a decision about which assets belong within each category. Of course, this is not to say that a court must find that certain assets are business assets or other assets; the whole of the spouses' property may fall within the definition of family asset and often does.

Section 58(2) Family Relations Act defines the term "family asset:"

This is the first important assumption about the division of property under the Family Relations Act: every asset is a family asset. It is up to the spouse claiming that an asset doesn't qualify as a family asset to prove that the asset is not a family asset.

The second important assumption is that each spouse ought to have an equal interest in every asset which qualifies as a family asset. Section 56 of the act says that:

It is possible, however, for assets to be divided unequally if it can be proven that an equal, fifity-fifty division would be unfair. It is up to the spouse claiming that an equal division would be unfair to prove that an equal division would be unfair. Section 65 of the act says that:

Whether assets are divided unequally will depend on the particular history and financial circumstances of each couple and the particular situation they find themselves in on their separation.

The remainder of this chapter will discuss the nature of family assets in detail, how different sorts of assets are characterized as family assets under the act, and explore the two categories of assets that aren't family assets, business assets and other assets.

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Section 58 of the Family Relations Act sets out the definition of "family asset:"

All of a couple's assets are presumed to be family assets from the get go; if a spouse disagrees with the characterization of some or all of the assets as family assets, it is up to that spouse rebut this presumption and prove that the disputed assets are not family assets. Section 60 of the Family Relations Act provides that:

Two elements of this section deserve to be explored in more detail, and some of the terms used in s. 58 need a better explanation too.

A. "Ordinary Use"

The courts will take a broad view of the meaning of "ordinary use." This phrase usually means regular use in the course of day-to-day life, rather than the odd, occasional use. The incidental or occasional use of an asset for a family purpose will not necessarily make that asset a family asset.

The courts have considered the meaning of "ordinary use" as follows:

1. most assets are ordinarily used for family purposes and will qualify as family assets;
2. the intention to use an asset for a family purpose may bring an asset within the definition;
3. the use of an asset before marriage does not mean that the asset necessarily falls within the definition;
4. empty land which is intended to be developed for a family home, or for other family purposes, may be a family asset; and,
5. financial assets intended to be used for the family upon retirement may be a family asset, even though they were never used during the marriage for the benefit of the family.

B. "Family Purpose"

Unlike "ordinary use," the courts will not necessarily take a broad view of the phrase "family purpose" and there is no clear trend in the case law on this point. Suffice it to say that unless an asset expressly falls within the two excluded categories of asset, business assets and "other" assets, the odds are very good that the asset in question was used for a family purpose. Family purposes might include:

1. living in the family home;
2. taking a car to the store for groceries or to drop the children off at dance class;
3. vacationing at a recreational property;
4. spending the interest on investments on the family;
5. paying bills with a bank account;
6. using an inheritance to pay off the mortgage on the family home; and,
7. spending the income earned from a business on the family.

A narrow interpretation of the phrase "family purpose" would be "a use connected with or benefitting the family as a whole," not just with one member of the family. This would narrow the scope of the assets which fall into the category of family assets.

A broad interpretation would include assets owned and used by only one member of the family. For example, assets owned by one spouse but intended to be used to provide for the family in the future have been held to be used for a family purpose. This would expand the scope of the assets which fall into the category of family assets.

C. Property Owned by Corporations: s. 58(3)(a)

If a company owns property that would otherwise be considered a family asset, like a cottage owned by a company which is controlled by a spouse, the shares in that company may become a family asset.

Although the property itself, in this case the cottage, won't become a family asset, the value of the property is reflected in the value of the spouse's shares. The shares, or the value of the shares, will be split between the spouses, and the company will continue to own the asset.

D. Transfered Property: s. 58(3)(b)

When a spouse has transfered property to a third party or to a trust which that spouse controls, that property may still qualify as a family asset. Moving the asset, or changing the nature of its ownership does not necessarily disqualify it from division.

If an asset is irretrievably transfered to a third pary, for example by the unilateral sale of the family car to some unrelated buyer, the spouse who sold the asset will be liable to pay the other spouse one-half of the asset's value in compensation.

In some cases, the transfer of the property can be set aside, especially if the transfer was done for the express purpose of defeating a spouse's claim to an asset. In a case like this, the transfer might qualify as a "fraudulent conveyance" within the meaning of the provincial Fraudulent Conveyance Act and be reversed.

D. Savings Accounts: s. 58(3)(c)

Money held in savings accounts is considered to be a family asset when that money is used or intended to be used for a family purpose. Depending on the circumstances, this may include other savings vehicles, like GICs, and money deposited into a secret account during the marriage.

Where a savings account is a joint account or a joint term deposit, the fact that the account is in both spouses' names is normally sufficient to characterize the account as a family asset, even if the account is normally only used by one of the spouses.

E. Pensions and RRSPs: s. 58(3)(d)

Annuities, pensions and retirement savings plans are considered to be family assets under the act by definition. Pensions are divided under the rules set out in Part 6 of the Family Relations Act, other retirement savings accounts are dealt with under Part 5.

F. Business Ventures: s. 58(3)(e)

When a spouse has contributed towards a business venture, either directly or indirectly, the spouse's interest in that venture may be a family asset. The spouse's contribution need not be in money, it can also consist of time, labour or anything else which gives rise to his or her interest in the venture.

The key here is whether the asset in question constitutes a "venture" within the meaning of this section of the act. Under this section the following assets, among others, have been held to qualify as ventures:

1. businesses;
2. stock holdings, including options to purchase stock;
3. medical and dental practices;
4. purchases of property, where the property is bought on the assumption it will increase in value and generate profit for the family;
5. investments in franchises; and,
6. lottery winnings, despite the normal rule that lottery winnings aren't considered to be family assets.

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Assets that qualify as "business assets" are not family assets subject to division under the Family Relations Act. Section 59(1) of the act sets out the definition of "business asset:"

If an asset is found to be a business asset, it cannot be divided between the spouses. To qualify as a business asset, the asset must be ordinarily used for business purposes and the spouse who does not own the asset cannot have contributed towards either its purchase or operation. Business assets typically include the following:

1. companies;
2. shareholdings in companies;
3. company-related assets, like patent and trademark rights or accounts receivable; and,
4. property owned by companies that the spouse holds shares in, like buildings, works of art and furniture.

Of course, if the non-owning spouse has contributed to the business asset, either directly (through money or labour) or indirectly (through the support of the owning spouse), the business asset may become a family asset.

The court has found business assets to be shareable family assets in the following situations, among others:

1. where a spouse has contributed paid or unpaid work to a business;
2. where family assets have been used to buy or operate the business;
3. where family assets were contributed to the business;
4. where the non-owning spouse has contributed to the business by guaranteeing or co-signing a business loan; and,
5. where the non-owning spouse has allowed family assets to be used as collateral for a loan obtained by the business.

Note that minor or infrequent contributions by a non-owning spouse are not likely to make a business asset a shareable family asset, nor is this likely to be the case where a non-owning spouse's "role" in the company is fictitious and for income tax purposes alone, such as for income-splitting.

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If an asset is neither a family asset within the definition of s. 58 of the Family Relations Act, nor a business asset within the definition set out in s. 59, it is categorized as an "other" asset, and, ususally, remains the property of the owning spouse.

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Whether an asset falls within the scope of s. 58 of the Family Relations Act and qualifies as a shareable "family asset" depends on whether it was ordinarily used for a family purpose. In general, the characterization of a particular asset as a family asset will rest on the circumstances of each case.

A. Gifts and Inheritances

Gifts and inheritances are usually given to a specific spouse for his or her own personal use. In general, they are not family assets subject to division between the parties.

There are, however, some cases which indicate that where the gift or inheritance was used for a family purpose, like paying down a mortgage or family debt, the asset may be classified as a family asset. In general, the longer an inheritance or gift was used for a family purpose, the more of the asset will be considered to be a family asset.

B. Severance Pay

Severance pay received following a dismissal from employment is treated as income rather than as an asset. While severance pay will not be counted as an asset to be divided, it may come into consideration in deciding what a person should pay as child or spousal support.

C. Dowry Assets

Where dowry is a gift given in expectation of marriage, dowry assets are usually treated as a personal gift and are not shareable, especially where the dowry is received before marriage as a payment for the marriage.

Where the dowry or dower consists of assets brought by a spouse into the marriage, if the assets were intended to be used for the benefit of the family or were used for the benefit of the family, they will be treated as shareable family assets.

D. Pensions

Pensions are shareable family assets by definition. The period of the pension which is normally shareable is the period from the date of the marriage until the triggering event; contributions made before marriage and after the triggering event, and the interest accruing on those periods of contribution are, in general, not shareable.

Note that it is possible for the court to make an order requiring the sharing of the pension from before the date of marriage, or to reapportion the portion of the pension which is shared. As the BC Court of Appeal said in the 1995 case of Toth v. Toth, it is up to the spouse seeking reapportioment to prove that it would be unfair to share the pension equally before the pension will be divided in anything other than an equal manner.

E. Canada Pension Plan Benefits

CPP credits are automatically equalized between spouses on their divorce. British Columbia is one of only a few provinces which allow a couple to choose not to divide their CPP credits. Note that the CPP people in Ottawa must be notified of the parties' intention not to equalize their CPP credits or they will automatically equalize the credits upon being notified of the divorce.

CPP credits can also be equalized between people in a common-law relationship, however the person seeking to equalize the credits must apply within a certain period of time following the end of the relationship.

F. Court Awards

Court awards for damages for personal injury or another civil wrong are considered personal to the spouse who receives them and are, in general, not family assets to be shared between the spouses.

Where an award contains an allotment for lost wages, that portion of the award may be taken into account as income for the purposes of child or spousal support.

G. Works of Art

Art located in the family home is a shareable family asset where the art is used for the enjoyment of the family and decoration of the home. If an artwork is bought for a business and displayed at the business, it will likely be characterized as a business asset and will not be shareable.

H. Jewellery

In general, jewellery is personal in nature and will not be characterized as a family asset. This includes gifts of jewellery made by one spouse to the other.

Jewellery which is given to the family as an asset or a form of savings, as is common in some cultures, will be treated as a shareable family asset.

I. Recreational Vehicles

Boats, motorcycles, ATVs, jetskis and so forth will be family assets where they are bought with family assets, like the contents of a savings account, or are used by members of the family for recreational purposes.

J. Timeshare Properties

Timeshare properties will be family assets where they are bought with family assets or are used by the family on holidays. Most timeshares don't give the owner an ownership interest in the property itself, only the right to use the property during specific periods of time. Timeshare must often be sold within or to the company that manages the property, and the resale price may be restricted. The value of the timeshare to be split with the spouses is the resale price of the timeshare.

K. Travel Points and Membership Points

Air Miles points, Aeroplan points, Save-On-Foods points and other travel and membership points will often qualify as family assets when they were accumulated for a family purpose, like holiday travel, or in the course of spending on the family, like when buying groceries. The status of points like this has nothing to do with the terms of the membership, like this from the fine print of Shoppers Drug Mart's Optimum Program:

"20. Upon the death of a Shoppers Optimum Member, the Member's account will be closed and any Shoppers Optimum Points in the account will be forfeited. Shoppers Optimum Points are not divisible in the case of divorce."

Although Shoppers Drug Mart may refuse to cooperate in the division of the points, the value of the points can be calculated and taken into account in the division of assets, with the spouse who is keeping the points paying something to buy out the other spouse's interest in the points.

Points accumulated by a spouse's company, such as from the use of an Aeroplan-affiliated corporate credit card, will be the property of the company and will not qualify as family assets. The value of the points will, however, be reflected in the value of the spouse's shares in the company.

L. Club Memberships

Club memberships which require dues to be paid on an annual or monthly basis to keep the membership current are family assets where the membership is held by a family member. Some clubs have restrictions on the transfer of memberships, sale of memberships and nomination of new members which will affect the value of the membership and the division of the membership between spouses.

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