Family Property vs Excluded Property

Family Property vs Excluded Property in BC

Every property division file in British Columbia starts with the same sorting exercise. Everything you and your spouse own goes into one of two boxes. Family property is presumptively shared. Excluded property presumptively stays with the spouse it belongs to. Where each asset lands, and what evidence supports that call, usually matters more than anything else in the file.

SiLaw Group Family Lawyers is a boutique family law and mediation firm in South Surrey. Family law is the only kind of law we practise, and we work in English and Punjabi. This page explains how we classify property on a real file and what the Family Law Act says. If you want a step-by-step walkthrough of proving an exclusion yourself, read our companion guide to excluded property in BC. This page is about what we do with these rules on your behalf.

The Starting Point Is a Half Interest in Everything

Section 81 of the Family Law Act sets the default. Subject to an agreement or order that says otherwise, spouses are both entitled to family property and responsible for family debt, regardless of their respective use or contribution. On separation, each spouse has a right to an undivided half interest in all family property, and each is equally responsible for family debt.

Read that again, because it surprises people. Contribution does not decide the split, and neither does who earned the money. The starting point is half, and it takes something specific in the Act to move off it.

What Counts as Family Property?

Section 84 casts a wide net. Subject to the exclusions in section 85, family property is all real and personal property owned by at least one spouse on the date the spouses separate, plus property acquired after separation if it is derived from that property. The section then lists examples, including:

• shares or an interest in a corporation, partnership, business or venture
• money in bank accounts
• amounts owing to a spouse, including tax refunds
• a spouse's entitlement under an annuity, pension plan, RRSP or income plan
• the amount by which the value of excluded property has increased during the relationship

That last item is section 84(2)(g), and it is the one clients most often miss. We come back to it below.

What Is Excluded Property Under Section 85?

Section 85(1) pulls certain assets back out of the pool. The main categories are:

• property a spouse acquired before the relationship began
• inheritances to a spouse
• gifts to a spouse from a third party, such as a parent
• certain damages awards and insurance money, except the parts that compensate both spouses or replace lost income
• some trust interests, including a spouse's interest in a discretionary trust settled by someone else that the spouse did not contribute to
• property derived from any of the above

The excluded asset itself is not shared. But under section 85(2), the spouse claiming an exclusion is responsible for demonstrating it. An exclusion you cannot prove with documents is an exclusion you may not keep.

Is the Growth on Excluded Property Shared?

Yes, and this rule reshapes many files. Under section 84(2)(g), family property includes the amount by which the value of excluded property has increased since the later of the date the relationship began or the date the property was acquired. Bring a condo into the relationship and the condo's starting value can stay yours, but the growth during the relationship is family property. The same goes for an inheritance that was invested. That makes the value at the start, or at receipt, a number someone has to prove.

Does It Matter Whose Name Is on Title?

Far less than most people expect. Section 81 applies regardless of use or contribution, and being on title does not by itself create or defeat a claim. Section 85(3) adds that an exclusion applies despite a transfer of legal or beneficial ownership from one spouse to the other. Title still matters for evidence and for practical steps like sale or refinancing, but the division analysis runs on sections 84 and 85, not on the land title printout.

What We Do on a Classification File

Here is what the work actually looks like when you retain SiLaw Group:

• Build the balance sheet. We list every asset and debt, in both names and in one name, and press for full financial disclosure from the other side.
• Classify each item. Family, excluded, or partly both, with the section of the Act that supports each call.
• Prove the numbers. Start-of-relationship values, dates of receipt, and the paper chain behind every claimed exclusion.
• Value what needs valuing. Homes, businesses and pensions often need appraisers or valuators, and we coordinate that work.
• Negotiate from the law. Most files settle. A classification backed by documents and statute settles on better terms, whether in mediation or lawyer-to-lawyer negotiation, and the result is recorded in a separation agreement.

Frequently Asked Questions

Do These Rules Apply to Unmarried Couples?

Often, yes. For property division, a spouse includes a person who has lived with their partner in a marriage-like relationship for a continuous period of at least two years (section 3). The relationship begins on the earlier of the date the couple began living together in a marriage-like relationship or the date of the marriage, so pre-marriage cohabitation counts toward what was acquired during the relationship.

Can We Make Our Own Rules About What Is Shared?

Yes. Section 92 lets spouses agree to divide property equally or unequally, to include items that would otherwise be excluded, and to exclude items that would otherwise be shared. A properly prepared agreement is the main tool for couples who want certainty.

What if We Cannot Agree on the Classification?

Most classification disputes come down to evidence, so the first move is to complete disclosure and assemble the records. If a dispute remains, mediation resolves many of them. Court is the backup, not the default, and we tell you plainly when a fight over an item is not worth its cost. See our pricing and fees page for how we bill.

Talk to a Property Division Lawyer in Surrey for Free

Whether your question is a house, a business, or an inheritance you want to protect, the classification work should start early, while records are easy to find. The first 30 minutes with us are free, in English or Punjabi, by phone, video, or in person at Suite 201, 3108 Croydon Drive in South Surrey. Call (778) 381-9977 or Book Now for a Free Consultation. You can also start with our overview of property division services.

This page is legal information, not legal advice. For advice about your own situation, speak with a lawyer.