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Change is Coming
There are major changes coming in family laws for British Columbians.
The Family Law Act was passed by the provincial legislature in November 2011 and will be fully in force sometime in 2013. This article will hopefully allow savvy Fernie Fix readers the time to consider the cheery consequences of this new legislation.
The Family Law Act imposes new and different principles on a number of family law subjects, including children, support and the division of property. However, the focus of this article is only on the changes to the law on property division as these are the most significant.
First, a refresher on the present law. Right now, married spouses are presumed to be entitled to a one-half interest in all assets owned by either spouse. When you get married all of the assets go into one big pot to be divided equally should the marriage break down. As with all rules, there are exceptions, but those are the basics.
The present law for unmarried couples is much less straight forward because the presumption of equal division of property does not apply. Where only one spouse owns an asset, the non-owner must establish an entitlement to ownership in the asset by meeting a legal test, which is beyond the scope of this article. The law for unmarried couple’s property division is complex and rarely provides unmarried couples with anywhere close to what they would have received had they been married.
The new Family Law Act replaces the former presumption that all assets of married couples are divided equally. The new method for dividing property is equalization of the net worth acquired during the relationship. For example, if one spouse owns a house before the relationship, that spouse would keep the house upon the breakdown of the relationship, but the couple would share in the amount the house increased in value during cohabitation, if any.
The more significant change is that this new property division scheme applies the same to married couples as unmarried couples. A couple only needs to live together for two years to be considered a common law. Unmarried couples should be taking notice of this subtle relationship landmark and the resulting legal consequences.
Also, in the new family legislation, each spouse is presumed to be equally responsible for all debts incurred by either spouse during cohabitation. This would include everything from a mortgage to credit cards, so spouses may want to pay attention to what the other is doing in this department.
Some may argue that the new Family Law Act seems to better fit with people’s expectations about what is fair. Each couple would “keep what is theirs,” but share the property and debt that accumulated during the relationship. Other more cynical opinions are that the property division rules applying equally to common law couples as they do married couples will take many by surprise.
You might agree with the new property division scheme, or you might not think the new scheme is fair and prefer the old. The good news is that if you don’t like the new legislation, or the old for that matter, you and your spouse can enter into a contract before marriage or cohabitation dealing with how you think it would be fair to divide each partner’s property, wealth and assets upon breakdown of the relationship. It is strongly advisable to have a lawyer prepare such a contract. In other words, don’t get a contract off the internet and think that you are good to go as often the do-it-yourself contracts cause more problems than good.
Suggesting a legal contract to your loved one about how you are going to split up your stuff if the relationship goes south may not earn you any brownie points. But agreeing upon all of these things before emotions are high is much less painful and expensive than the strife that frequently arises when couples separate and cannot agree upon how to divide their property. Because you know what they say; all is well that ends well.