Vancouver Losing Excluded Property Division lawyers warn that the law in BC on the issue of what is excluded property and how you can lose your exclusion is confusing, to say the least. In early days after the Family Law Act was enacted cases went both ways on what happened when you put excluded money or property into a new joint tenancy home. Over the years we looked for more clarity but the only certain thing we have learned to date is that putting excluded property into a jointly owned home is fraught with danger for the person using the excluded money. Today high net worth separation lawyer Lorne MacLean, QC warns wealthy spouses on how to protect excluded property.
Section 85 provides that certain classes of property, including property acquired by a spouse before the relationship began, are excluded from the definition of family property. The categorization of property as family property or excluded property is significant as each spouse is generally entitled under s. 81 to an undivided half interest in the family property as a tenant in common.
A new BC Court of Appeal case called Pisarski will again send shock waves through the family law community. Vancouver Losing Excluded Property Division lawyers warn parties entering into a relationship with significant excluded property or who transfer excluded property during their relationship to read this case and better yet to consult with one of our experienced Vancouver Losing Excluded Property Division lawyers.
Vancouver Losing Excluded Property Division Call 1 877 602 9900
KEY TIP – To avoid losing the exclusion the “transferor” (the person putting in the excluded money or who changes a home from their sole name into joint tenancy or who puts a house in their spouse’s name for creditor protection) can require the transferee to acknowledge that no gift of the excluded property (or its value) is intended. For heaven’s sake use an experienced family lawyer to properly paper the deal!
So What Did The Court Of Appeal Say on Losing The Exclusion?
[22] The definition of “family property” in s. 84 establishes a communal pot from which only excluded property, defined under s. 85, is removed. The definition of “family property” is very broad: V.J.F. v. S.K.W., 2016 BCCA 186 at para. 8. Section 85 provides that certain classes of property, including property acquired by a spouse before the relationship began, are excluded from the definition of family property. The categorization of property as family property or excluded property is significant as each spouse is generally entitled under s. 81 to an undivided half interest in family property as a tenant in common.
[23] Family property may only be divided unequally if equal division would be “significantly unfair” pursuant to factors listed in ss. 95(2) and (3). On the other hand, excluded property cannot be divided unless it would be significantly unfair not to divide it having regard to the duration of the parties’ relationship and any direct contribution by a spouse to the preservation or maintenance of the property: s. 96(b); V.J.F. at para. 10.
[24] The onus rested on the appellant to prove her contribution was excluded property pursuant to s. 85. The proper test for establishing a claim to excluded property is proof on a balance of probabilities: Shih v. Shih, 2017 BCCA 37 at para. 42. Precision or mathematical certainty is not required, but to discharge the burden, the party seeking to prove property is excluded property must do so with clear and cogent evidence: Shih at paras. 40, 43. If documentary evidence is not available, the party seeking to exclude property will need to testify as to their recollection of the disputed transactions and that evidence will be scrutinized for credibility: Shih at para. 43. In balancing the evidence as a whole, the judge is permitted to draw reasonable inferences from evidence that is less than certain or precise in order to do justice between the parties: Shih at para. 44.
…He made a finding of fact at para. 48 that each party intended to gift their respective contributions to the acquisition of the Fulton Property for the purposes of the marriage. In V.J.F. at para. 48,this Court observed that whether a transferor made a gift such that excluded property is no longer excluded, is a question of fact.
[30] The judge rejected the appellant’s testimony and inferred from the evidence that she had the intention to pool her contribution with the respondent’s funds for the purposes of the marriage. There was “a confluence of real property (and proceeds).
[32] Also in V.J.F. (at para. 78), the Court noted there are means by which a spouse can protect against “losing” the exclusion. For example, subject to other relevant provisions of the FLA, the transferor can require the transferee to acknowledge that no gift of the excluded property (or its value) is intended.The judge addressed these observations from V.J.F. in noting the appellant took no steps to keep her funds separate or to document that her contribution should be kept separate.These findings of fact were supported by the evidence and are entitled to deference on appeal.
