A family law client of mine in Vancouver recently asked me why certain assets of hers needed to be divided between her and her former spouse. The assets in question were stocks and investments that she had inherited from her grandmother. She was under the impression that these assets were not subject to the division of property rules in BC’s Family Law Act. She was partly correct, but things are not quite that simple.
Assets of spouses are grouped into “Family Property” and “Excluded Property” under part 5 of the Family Law Act. Any asset that is considered Family Property is subject to division between the spouses upon separation. Excluded Property is not subject to division.
Excluded Property does include assets that were inherited by a spouse as well as money or property they acquired before the relationship began. However, according to section 84(2)(g)(ii), Family Property includes the amount by which the value of excluded property has increased since the later of two dates: either the date that the relationship between the spouses began, or the date the Excluded Property was acquired.
So, if my client had inherited $100,000 during her marriage or cohabitation, that amount would be excluded from property division upon separation. But, if she had invested that $100,000 and it had increased in value to $200,000 by the time she separated from her partner, the $100,000 increase in the value of the inheritance would be considered a family asset and would be subject to division.
Figuring out how much of a spouse’s property forms part of the “pie” that gets divided when spouses separate is just one of the interesting and often contentious parts of a family law case!