The new Family Law Act replaced the old Family Relations Act, and came into force in March 2013. The new Act not only changed the definitions of spouse (https://cecraig.com/the-family-law-act-changing-the-definition-of-spouse/) but it also changed which property is excluded from being considered family property, that is joint assets of yourself and your partner.
S. 85 of the FLA set out which pieces of property are excluded from being considered joint assets.
(https://www.canlii.org/en/bc/laws/stat/sbc-2011-c-25/latest/part-6/sbc-2011-c-25-part-6.html). Remember that in order to be considered a spouse and be able to exercise these rights you don’t have to be married, you only need to have lived together for 2 years in a marriage-like relationship.
Excluded property includes:
All property acquired solely by one spouse before the relationship began (although if a non owning spouse has been using the property as a primary residence for more than 2 years they can register a charge on the title)
Some after acquired property including:
- Gifts and inheritance
- Some settlements and insurance
- Property held in trust for one spouse
- Property derived from the disposition of other excluded property (for example if you spend your inheritance on a boat and register it solely to yourself)
However, just because something was excluded property when you acquired it doesn’t necessarily mean it will stay that way. How you use your excluded property can change it from personal asset to joint asset. If you inherit money and use it to pay down the mortgage on the family home, you won’t get that money back if a separation occurs. Once it went into the joint asset it becomes part of that asset and the value will be split between yourself and your spouse.
So what can you do to stop your property becoming a joint asset?
You must be diligent about keeping your personal assets separate from anything that could be construed as being used for the relationship. If you are unsure how to do this you can seek a professional opinion. Generally keep any proceeds from excluded property in a separate account. If you want to use them to pay down debt, pay down personal debt, not joint debt, or otherwise deposit them in separate investments. If you use them to buy anything that is clearly family property (like a shared vehicle) then they become part of a joint asset.
It is important to prepare for the worst-case scenario. Consider a prenuptial agreement or cohabitation agreement that sets out which property will be excluded from any separation proceedings. This is especially important if you own property that could be considered a joint asset under the Act. Interest in a company for example is included in the category of joint assets.
