Don't Wait to Divide Your Assets

DO YOU OWN REAL ESTATE AND ARE YOU SEPARATED FROM YOUR SPOUSE? DON’T WAIT TO DIVIDE YOUR ASSETS

Picture this: You separated from your married or common-law spouse. It’s understandably an uncomfortable situation, so you avoid talking to them at all costs, and put off having to deal with dividing up the assets (home, bank accounts, investments, etc). Before you know it, months and even years have gone by. It’s ok, you think to yourself, we don’t own anything in joint names. My assets will be protected.

Not true.

In BC, the Family Law Act says that any assets that existed at the start of the relationship, or that were acquired after the start of the relationship, are divisible with your ex-spouse (minus the net value of that asset as at the start date of the relationship).

This means, for example, if you owned a home that was worth $500,000 at the start of the relationship (let’s assume there is no mortgage), then that initial $500,000 value is not split with your ex-spouse, but any increase in value beyond that $500,000 is to be divided with them.

The courts have the discretion to only divide the assets that accrued during the relationship, and allow each spouse to retain any asset value that increased after separation. So, if your home was worth $550,000 at the time you separated from your spouse, but worth $700,000 by the time you actually get around to dividing the assets, you could argue that only $50,000 (the portion of the asset that accrued during the relationship) should be divided with your ex, and not the full $200,000 that accrued since the start of the relationship to the present day.

However, a recent BC Court of Appeal case has now decided that such an argument is invalid.

Banh v. Chrysler is a 2022 BC Court of Appeal case where the couple had only been together for 2 years, having married in 2014 and separated in 2016. They did not go to trial until late 2019, over three years after separation. The wife owned one real estate property, and the husband owned three real estate properties. BC property values being what they are, at the time of trial the husband’s real estate properties had increased in value by almost $400,000 after separation, with the wife’s lone real estate property having increased only $105,000 after separation. However at trial, the judge allowed the division of increase in value of the properties from the date of marriage to the date of separation only, resulting in the husband owing the wife $72,500.

The wife appealed the decision to the Court of Appeal, who decided that the trial judge made an error and instead should have divided the value of the properties that accrued from the date of marriage to the date of trial in 2019 (instead of the date of separation in 2016), which would result in the husband owing the wife an additional $150,000, on top of the $72,500 he already owed her.

The husband sought leave to appeal the BCCA decision to the Supreme Court of Canada, which denied the leave.

What does this mean? If you own real estate and you have separated from your spouse, do not wait to address asset division issues. Even if the assets are in your sole name, you face the very real risk of having to share with your ex the growth of the asset values from the start date of the relationship to the present day, regardless of how long ago you separated.

In other words: The longer you wait after separation, the more money you could end up owing your ex.

Click here book a consultation with one of our family lawyers at Catalyst Legal to find out more.