The first task that the court has in determining how assets should be divided is to determine whether each particular asset is a "family assets" subject to division, or a "personal asset" or "business asset" that is not subject to division. The court will presume that all of the assets a couple has, whether owned by one spouse alone or jointly by them both, are family assets. It is up to the person seeking to save an asset from division to prove that the asset is not a "family asset."

The characterization of property as "family assets" versus exempt assets is dicussed in the chapter "Family Assets > Basic Principles."

Next, the court must decide how the qualifying family assets ought to be shared. The general rule in the Family Relations Act is that family assets should be divided equally between the parties. When the court determines that an equal division would be unfair to one of the parties, it has the discretion to divide the assets unequally, or "reapportion," between the parties, so that one party receives more of the family assets than the other.

The criteria for reapportionment are set out in s. 65(1) of the Act:

These criteria will be applied to the facts of each case to determine whether or not, according to s. 65 of the Family Relations Act, the equal division of family assets would be unfair. In the 2001 case of Rusheinski v. Schmold, the Supreme Court of British Columbia described this process as follows:

"The factual matrix respecting the marriage and the decisions that were made during the marriage must be considered in determining whether a particular asset is a family asset and whether judicial fairness requires a reapportionment in favour of either party respecting that asset."

In a nutshell, however, equal division is the rule, unless a party can establish unfairness according to the factors lised in s. 65 of the act. The segments which follow will discuss the equal and unequal division of family assets in more detail.

This means that the rights and rules set out in the act are not the only way that married spouses can deal with the division of assets. While the provisions of the act are the most common way that people deal with the division of family assets, married spouses can also take advantage of the same property-related relief that unmarried couples use to deal with property, including:

1. claims under the provincial Partition of Property Act;
2. claims in equity; and,
3. claims under the law of trusts.

For that reason, married spouses may wish to read the final segment of this chapter, which discusses the relief available to unmarried couples.

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Under s. 66 of the Family Relations Act, the court can make an order that a share of the family assets be distributed prior to the trial. In general, this sort of interim distribution can only be done by consent or where one of the parties needs to pay for expert help and otherwise cannot afford to pay the expert. In all cases, there must be some source of liquid assets from which an interim distribution can be made, such as funds in a bank account or some RRSPs that can be cashed out; the court will not require that a house be sold to facilitate an interim distribution of assets.

Where the spouses agree that an interim distribution should be made, it doesn't matter what the purpose of the distribution is, they can just take what they wish, providing that there is documentation of their agreement to divide some of the assets prior to trial.

Where there is no agreement, the court can make a distribution only in very limited circumstances. In the 1995 case of Pierce v. Pierce, the British Columbia Supreme Court held that an interim distribution is only available when:

1. the advance of funds is required to enable a spouse to challenge the other spouse's position at trial; and,
2. the advance can be made without jeopardizing the other spouse's claim to the family assets.

In general, the bit about "enabling a spouse to challenge the other spouse's position" has been interpreted to mean the retainer of experts such as accountants and psychologists, but not to pay the spouse's legal fees. A 2001 case of the British Columbi Supreme Court, Hiemstra v. Hiemstra, said expressly that these sort of advance distributions are not for lawyer's fees, only for expert's fees.

Bear in mind that any interim distibution of the family assets, whether by agreement or on an application under s. 66, will be taken into account in determining the finaly distribution of the family assets; an interim distribution isn't free money.

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The Family Relations Act doesn't say why assets should be divided equally. The act probably assumes that because both of the parties have contributed towards the marriage, and to the purchase of the assets that have accumulated during the marriage, they should therefore share in those assets equally. Some contributions are obvious, as in the case of the spouse who brings home the larger paycheque. Other forms of contribution are less direct and include activities such as child care, running the household, preparing meals, and so forth. Just because money isn't received for perfoming these tasks doesn't mean these tasks have no value. Keeping the house and raising this children are valuable contributions which constitute real work and allow the spouse who works outside the home to continue to earn work outside the home without hiring a nanny or a housekeeper.

The courts will, in general, consider the question of which spouse contributed what broadly, and not get into the nitty gritty of who exactly did what in the relationship. In some circumstances, such as a long marriage, the court won't even get into the issue.

Remember, the presumption is in favour of an equal division of family assets, and, as the British Columbia Court of Appeal held in Toth v. Toth, the burden lies on the spouse trying to get an unequal division to prove that an equal division would be unfair.

When the court divides assets equally, it may:

1. allot certain assets to each spouse;
2. require one spouse to make a payment to the other to compensate that spouse for his or her share of a particular asset;
3. order that an asset, like a home, be sold and the proceeds divided between the parties; or,
4. set out a schedule of payments for the equalization of the assets.

This stage of things is more or less an accounting exercise. Unless the court says something as simple as "you each get half," some reckoning has to occur. Spouse A will want to keep his car and Spouse B will want to keep the china set. In order for Spouse A to keep the car, he must pay Spouse B one-half of the car's value. If Spouse B wants to keep the china, she has to pay Spouse A for his interest in one-half of the china's value.

Here's an example. In this case, there is a family home worth $250,000 which has a mortgage of $90,000. Spouse A has a minivan, worth $12,000 and Spouse B has a beater worth $2,000. There is a bank account of $5,000 and a credit card with $2,500 owing. In this example, the spouses have agreed that the house will be sold, the bank account split, the credit card paid out and that they will each keep their own cars. This is how it would work out:

First, the house gets sold. The sale proceeds are applied to the mortgage, outstanding utilities and city taxes, and to the real estate agent's commission:

house's sale price ...	$250,000
minus mortgage payout ...	$90,0000
minus commission and taxes ...	$10,000
leaves:	$150,000

Of the net proceeds of sale of the family home, $150,000 is left over to split between the spouses. Against this, the credit card should be paid out:

net sale proceeds ...	$150,000
minus credit card...	$2,500
leaves...	$147,500
one-half of which is:	$73,750

So far, the balance sheet looks like this:

	Spouse A	Spouse B
remainder of house proceeds	$73,750	$73,750
each spouse's car	$12,000	$2,000
one-half of the bank account:	$2,500	$2,500
Total	$88,250	$78,250

As you can see, Spouse A is getting more of the family assets since Spouse A is keeping a car that's worth $10,000 more than the Chevy Nova Spouse B is keeping. Ordinarily, for Spouse A would have to pay Spouse B $6,000 as one-half of his $12,000 car, and Spouse B would have to pay Spouse A $1,000 as one-half of her car. The net difference is $5,000:

one-half of Spouse A's car ...	$6,000
less one-half of Spouse B's car ...	$1,000
leaves:	$5,000

The easiest way to fix this isn't for Spouse A to write a cheque to Spouse B for the $5,000, it's to take it out of the proceeds of the sale of the house. Now the balance sheet looks like this:

	Spouse A	Spouse B
remainder of house proceeds	$73,750	$73,750
Spouse A's payout for his car	-$5,000	+$5,000
each spouse's car	$12,000	$2,000
one-half of the bank account:	$2,500	$2,500
Total	$83,250	$83,250

Finally, an equal split! In this case, Spouse A didn't make a payment of $5,000 to Spouse B, it just came out of his share of the proceeds of sale of the family home. Instead of getting a cheque for $73,750, he got one for $68,750 and Spouse B got one for $78,750.

The point of an equal division of assets is to perform just this kind of accounting. Each spouse can keep things that are important to him or her, so long as the other side receives some sort of payout for his or her half interest in the asset that is being kept.

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The following is a list of some of the factors that courts have taken into account in reapportioning family assets. It is important to note that the list of considerations set out in s. 65(1) of the Family Relations Act is not exclusive, that is, it is not limited to only those specific considerations. Section 65(1)(f) allows the court to take into account such "other" factors as it deems relevant.

Relative Contribution:

• The marriage is short, and one spouse brought more assets into the marriage than the other.
• The marriage is short, and one spouse earned significatly more than the other.
• A particular asset was bought mostly using the proceeds of a gift or inheritance received by one of the spouses.

Maintenance and Preservation of Assets:

• One spouse has had the burden of taking care of all of the property.
• A particular asset was maintained and preserved only through the efforts of one spouse.
• One spouse was solely responsible for maintaining the family and the family home and the marriage was lengthy.

Disposal or Wasting of Assets:

• One spouse has improperly or irresponsibly disposed of property before the marriage ended or before the trial was heard.
• A spouse was responsible for allowing the value of the assets to drop substantially without good cause.

Cost of Child Care:

• A spouse has significantly higher child care costs than the other following separation, and the situation is expected to continue.
• One spouse's employment is off and on, while the other spouse will have to bear ongoing child care costs.
• A child has special needs and requires special medical attention, and the spouse who does not have custody of the child is not expected to be able to contribute to these costs.

Inability to Become Self-Sufficient:

• A spouse is unlikely to become self-sufficient because of age.
• A spouse is unlikely to ever become self-sufficient because of ill health.

Inability to Pay Spousal Support:

• A spouse is not able to pay spousal support which the other spouse would otherwise be entitled to receive.

Certain other factors will not and should not be considered by the courts:

1. the conduct of the parties during the marriage;
2. a desire to "punish" a spouse;
3. the lack of children of the marriage;
4. which spouse actually owns a particular asset; or,
5. the spending habits of a spouse during the marriage (but not following separation).

Where the court has determined that the assets should be reapportioned, it will usually specify the particular percentage each spouse will receive of the family assets. The court may also make provision for specific assets, so that a spouse might be allowed to keep a car, as long as he or she pays the other spouse for their interest in the car.

Where a party doesn't have the means to make an immediate payment, the court may also provide for a schedule of payments, or a date by which the payment must be made.

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In general, how a couple chooses to actually accomplish the division of their assets is limited only by their imagination. A family home, for example, can be sold and the proceeds divided between the parties, or one spouse can buy out the other's interest; sometimes the sale is put off to a later time and the parties share rental income from the property in the meantime. There are a few assets, however, that must divided in a particular way.

CPP Credits

British Columbia is one of the few provinces that allow a couple to choose not to equalize their CPP credits between them following divorce; normally the credits are equalized. If you choose not to equalize your CPP credits, you must alert the CPP administrators in Ottawa.

While you can choose to share or not to share your CPP credits, you cannot choose to reapportion them, so that one spouse receives a greater share than the other. All the CPP people can do is equalize those credits.

The CPP administrators equalize the spouses CPP credits by transfering one-half of the credits accrued by each spouse, from the date of marriage to the date of divorce, to the other spouse. There are some odd peculiarties to how the CPP people calculate pensionable credits, and it may not always be a good idea to divide them. As this issue can be fairly complex, speak to a family law lawyer for proper advice about whether dividing your CPP credits is a good idea or not.

RRSPs

RRSPs are divided by filling out a special form from the Canada Revenue Agency, and sending the form to bank of the spouse who has the RRSPs and having the bank transfer all or some of the RRSP into an RRSP account held in the name of other spouse. You can specify a percentage or a fixed dollar amount which is to be transferred.

Ordinarily, when RRSPs are cashed in or transferred to someone else, tax is payable on the proceeds as if the proceeds were income from, for example, employment. The federal Income Tax Act has a special provision for RRSPs that allow the transfer of all or some of an RRSP between spouses without taxes being payable. This is known as a "tax-free spousal rollover."

Because the transfer of RRSPs between spouses is tax-free, you should not calculate the amount being transferred as if the RRSPs were being cashed out; the amount to be transferred should not take taxes into account at all.

Real Property

If the title to real property, like the family home, is going to change from one spouse to the other, or from the spouses' joint names to just one of the spouses, it is important to fill out the provincial "Special Property Transfer Tax" form. This form, which is printed on yellow paper rather than the usual green paper, allows spouses to transfer the title of property between them without having to pay tax on the transfer, as would normally be the case if the house was sold to a third party purchaser.

Apart from that one special provision, the transfer of title between spouses is conducted as a normal property transfer, using the Land Title Act's Form A Freehold Transfer. You will need a notary public or lawyer to properly execute this document.

Pensions

Pensions can be a bit tricky to divide, as the rules governing the division will change depending on:

1. what type of pension being split;
2. whether the pension is a "local" plan or an extraprovincial plan; and,
3. whether the pension is matured or unmatured.

The actual mechanics for dividing pensions can be really quite complex. In general, the part of the pension which is shared between spouses one-half of the amount of the pension which accrued following the date of marriage up to the date of the triggering event. This segment will discuss matured pensions and the two most common kinds of local pensions; triggering events are discussed in detail in the chapter "Family Assets > Protecting Assets."

First, some definitions:

• Member: The person who has contributed to the plan and in whose name the plan is held.
• Local Plan: A plan located within British Columbia and regulated by the provincial Pension Benefits Standards Act.
• Extraprovincial Plan: A plan located in more than one province and regulated by the federal Pension Benefits Standards Act.
• Matured Plan: A plan which is currently paying benefits out to a retired member.
• Unmatured Plan: A plan which is not paying benefits to a member.

Please note that if you have a problem involving the division of a pension, you really should consult a lawyer and, possibly, an accountant who specializes in the division of pensions. This segment is intended to provide a rough outline only of how pensions are handled.

Defined Benefit Pensions

Defined benefit pensions are the sort where the actual amount which will be payable isn't known until the person who holds the pension, the "member," retires or is eligible to retire. In the case of this kind of pension, the spouse entitled to share in the pension becomes a limited, non-voting member of the plan, and receives his or her share of the pension when the other spouse retires or becomes eligible to retire.

Once the member retires or becomes eligible to retire, the pension plan administrators will calculate the amount of the pension that the limited member is entitled to receive, and will start paying monthly benefits.

The pension plan administrators will normally require that certain paperwork be filled out to make the non-member spouse a limited member, and the date of marriage and the date of separation must be provided to allow the administrators to calculate the share of the pension the limited member will receive.

Defined Contribution Pensions

These sorts of pensions are easier to deal with because the value of the pension can be figured out at any given time, unlike defined benefit pensions which can only be valued at the date of retirement, nor is there any messing about making the non-member a limited member of the plan.

A spouse entitled to share in a defined contribution plan is entitled to have the plan transfer to him or her a fixed amount, representing one-half of the pension which accrued between the date of marriage up to the date of separation or divorce. This can be done immediately, and the recipient doesn't need to wait until the pension plan member retires. The only catch is that the funds must be transfered into a locked-in retirement savings vehicle, like an RRSP or a LIRA account; you can't just have the money deposited into your chequing account!

As with defined benefit plans, notice must be provided to the pension plan administrators and forms must be filled out before the funds will be transfered.

Matured Pensions

A "matured" pension is a pension which is currently being paid out; in other words, the pension plan member has already retired and is already receiving benefits. These pensions are divided by directing the pension plan administrators to pay to the non-member spouse his or her proportionate share of the benefits.

Again, notice must be provided to the pension plan administrators and forms must be filled out before non-member will begin receiving benefits from the plan, however once the paperwork goes through, the non-member will beging receiving his or her share of the benefits immediately.

Unequal Division of Pensions

Normally, pensions are divided between the date of marriage and the date of divorce in an 50/50 manner, as described above. Pensions, however, can be reapportioned under s. 65 of the Family Relations Act, and the date to which the non-member spouse is entitled to share in the pension can pre-date the date of marriage.

This last point is particularly important. In a 2003 case of the British Columbia Court of Appeal, HEDC v. RMC, the court allowed the non-member spouse to share in the entirety of a pension on the basis of the parties' material needs, capacities and economic circumstances despite a separation agreement which required the pension to be divided equally.

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The author has created a rough — very rough — property division guesstimator which may help to illustrate some of the different factors that go into the division of family assets in British Columbia. Users are cautioned not to rely on the guesstimator for anything other than novelty value, and to always seek the advice of a family law lawyer when questions arise concerning the division of family assets.

Click here to use the guesstimator, and good luck.

The guesstimator is presently being offered in a rough draft form only. If the author can find the time, certain subtleties and nuances will be added to and ironed out of the guesstimator.

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Unmarried couples cannot make a claim for the division of assets through the Family Relations Act. When an unmarried couple owns an asset jointly, like the title to a house or a car, they are presumed to be equally entitled to share in the value of that property. Where a person makes a claim against an asset owned only by the other, he or she will have to prove an entitlement to that asset through the principles of the common law.

Jointly Owned Assets

Where a couple are both on the title of an asset, from the family home to a car to a bank account, they are each assumed to have an equal interest in the asset. When one party refuses to give the other his or her share of that asset, it is open to that person to make a claim under the principles of equity for either:

1. the sale of the asset and the division of the proceeds of the sale; or,
2. a payment in compensation for his or her interest in the asset.

This sort of claim can be handled by either the Supreme Court or the Provincial (Small Claims) Court.

Where a piece of real property is jointly owned, it is possible to make a claim under the provincial Partition of Property Act. Section 2 of this act says that:

This piece of legislation allows a co-owner, including someone with only an equitable interest in the property, such as an interest under the law of trusts as discussed below, to apply for an order that the property be sold and the proceeds of the sale divided.

Individually Owned Assets

Where a person believes that he or she has a claim to assets owned solely by the other person, a claim against those assets can only be raised under the principles of the common law, specifically, the law of trusts.

The essential point of a trust claim is that the non-owning party has, or should be considered to have, a stake in property owned by the other party. The non-owning party's interest in that property is said to be held "in trust" for the non-owning party by the person who owns the property on paper. The non-owning party who is the beneficiary of a trust held by the owning party is entitled to receive compensation for his or her interest in the property subject to the trust.

There are three kinds of trust claim that may be made, a "constructive trust," an "express trust" and a "resulting trust." Put simply, a resulting trust arises when the conduct of the parties gives rise to or implies the trust relationship; an express trust is a trust that people intentionally enter into; and, a constructive trust arises where one party has gratuitously contributed to an asset and suffered a loss that the other party directly benefitted from. Resulting and constructive trusts are discussed in more detail below.

Needless to say, trust law can be complex. If you find yourself in a situation where your only claim to an asset or a share of an asset is through trust law, it is recommended that you hire a lawyer to handle your claim.

Resulting Trusts

A resulting trust can be created in the following circumstances:

• One party loans or gives money to the other party to allow in or her to buy an asset, and the person buying the asset owns the asset in his or her name alone.
• One party transfers property to another without payment.

In each case, the person who transfers the money or asset to the other party is said to retain an interest (called a "beneficial interest") in the property, even though the property is held by the other party in his or her name alone. In an action for the division of property based on a resulting trust, the applicant seeks compensation for his or her beneficial interest in the property owned by the respondent. The respondent, on the other hand, can rebut the applicant's claim by showing that the applicant transfered the money or the asset as a gift. If the respondent can show that the applicant made a gift, the applicant's claim will likely be defeated.

Constructive Trusts

This form of trust is the more common trust claim in family law. It is called a "constructive" trust because the applicant is asking the court to create or impose a trust on the respondent. According to the Supreme Court of Canada's decision in the 1980 case of Pettkus v. Becker, the seminal case on constructive trusts, three facts must be proven for a constructive trust claim to succeed:

1. that the respondent was unfairly enriched;
2. that the applicant was correspondingly deprived; and,
3. that there is no legal reason for the respondent's enrichment.

"Enrichment" means to have received a benefit or advantage, such as money or unpaid labour. "Deprivation" means to have lost the value which might have been otherwise received for the benefit or advantage, such as the loss of the money or the wages which might have been paid for the labour. The deprivation must "correspond" to the enrichment, in the sense that the applicant was deprived of exactly the thing which the respondent benefitted from.

There is one other case from the Supreme Court of Canada which is critical in understanding constructive trusts, called Peter v. Beblow. To get a proper understanding of the law relating to constructive trusts, you should read both Pettkus v. Becker and Peter v. Beblow. These decisions are available online from the court's own website, a link to which is provided in the section "Resources & Links."

The following is an example of a stereotypical situation in which a constructive trust could be found. Note that the circumstances in which courts have found there to be a constructive trust are fairly broad; this is just one example of a situation which might lead to a successful claim.

Partner A moves into a home owned by Partner B. They live together in a marriage-like relationship, and Partner A's role in the relationship is as the homemaker. Partner A also, out of the kindness of her heart, helps Partner B with his web design company, doing Partner B's books.

Partner B doesn't pay Partner A for Partner A's labour; it's understood that Partner A is helping out with a common cause, since Partner B's company is what provides the family with its income.

Partner A's labour in the home, cooking, cleaning and tidying, allows Partner B to devote his time to the web design company, and saves him from having to hire a housekeeper and a cook, not to mention having to hire an office manager for the company.

Partner A, on the other hand, is losing something. Partner A could have sold her services as a housekeeper, and launderer and a cook. Partner A could certainly have worked as an office manager for some other company. Furthermore, Partner A has made a positive contribution to Partner B's company.

Ten years pass, Partner B's company grows in value, and the relationship comes to a tragic end when Partner A discovers that Partner B's late night conference calls with the internet service provider in Alberta weren't purely Platonic.

In this example, Partner B was "unjustly enriched" by Partner A's labour in the home and her contribution to the web design company, as he didn't have to hire an office administrator and her labour in the home both freed Partner B to develop his company and saved him from having to hire a housekeeper. Partner A, on the other hand, lost out on ten year's worth of wages as an office administrator, and ten year's worth of wages as a housekeeper. Partner B was enriched by exactly the thing Partner A was deprived of: her labour and the financial value and benefit of her labour.

Once an unjust enrichment has been found, the court must determine what the appropriate remedy would be to compensate the applicant for his or her interest in the property. The value of the trust will often be determined by the court based on the value of the contribution made by the applicant to the property or the purchase of the property.

In the example above, a financial value can be attached to Partner A's contributions to the company and her labour in the home: what would it have cost to hire a housekeeper and a bookkeeper for four years? This is the beginning of fixing a dollar value on Partner A's interest in the company and in Partner B's house. Note that the amount the courts typically award to unmarried persons, in cases where a trust relationship is found, is usually a lot less than 50% precisely because of this mathematical calculation of enrichment and deprivation.

Note also that the fact that a relationship was short may not prevent a decision that a party was unjustly enriched, particularly if the applicant's contribution was substantial. In longer relationships, say more than six years or so, the courts have often awarded trusts equivalent to half the value of the assets, although there are exceptions where the awards have been both much lower and much higher.

Again, trust claims are complex and the case law supporting and opposing such claims is massive. If you are unmarried and wish to claim against your partner's assets, it is highly recommended that you hire a lawyer to advance your claim for you.

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